Earlier this year, the tax-free mileage rate went up for the first time in over a decade. The Budget has now confirmed that the increase is permanent, and there’s a further rise on the way for high-mileage drivers.
🚗 A quick recap
From 6 April 2026, the AMAP rate for the first 10,000 business miles in an employee’s own car or van increased from 45p to 55p. It was announced on 21 May 2026 as a temporary rate for 2026-27, backdated to 6 April 2026.
📅 What the Budget added
The Budget 2026 makes the 55p rate permanent and, from 6 April 2027, increases the rate applying after 10,000 business miles to 35p. Importantly, this applies for employees’ approved mileage allowance payments and for the simplified mileage rate the self-employed use.
💼 What it means for employers
You don’t have to pay the full rate. Employers are not required to reimburse mileage at these approved rates. However, any mileage payments made above the approved rates must be reported through payroll and treated as taxable earnings. If you pay less, employees may be able to claim Mileage Allowance Relief from HMRC on the difference.
It’s also worth a quick system check, as some employers’ expense systems may still be set to 45p
✅ What should you do?
- Check your expenses software or mileage policy is using 55p for 2026/27 claims.
- Make a note to update the over-10,000-mile rate to 35p from 6 April 2027.
- If you’re self-employed and use simplified mileage, keep an accurate log of business miles so you can claim the full amount.
- Employees whose employer pays less than 55p should keep their records and speak to us about claiming relief.