For the first time since 2011, the tax-free mileage rate has gone up. From 6 April 2026 you can be paid 55p a mile for the first 10,000 business miles in your own car or van — up from 45p — with no income tax or National Insurance to pay.
If you drive your own vehicle for work, this is one of the few genuinely good pieces of tax news in 2026/27. The rate had been stuck at 45p for 15 years while fuel, insurance and servicing all climbed. Below is the full new rate table, who actually benefits, and a worked example showing exactly how much extra someone doing 12,000 business miles can put in their pocket.
What is AMAP?
AMAP stands for Approved Mileage Allowance Payments. It is HMRC's flat, tax-free rate that an employer (or a director's own company) can pay an employee for using their own car, van, motorcycle or bike on business journeys. The rate is meant to cover everything — fuel, wear and tear, insurance, servicing and depreciation — in one simple figure per mile.
The key feature is that anything paid up to the AMAP rate is completely free of income tax and National Insurance. You don't need to keep fuel receipts or prove your actual running costs; you just record the business miles and apply the rate.
The new 2026/27 AMAP rate table
From 6 April 2026, the start of the 2026/27 tax year, the approved rates per HMRC are:
| Vehicle | Rate (first 10,000 business miles) | Rate (above 10,000 miles) |
|---|---|---|
| Cars and vans | 55p per mile | 25p per mile |
| Motorcycles | 24p per mile | 24p per mile |
| Bicycles | 20p per mile | 20p per mile |
| Passenger payments | 5p per mile, per passenger carried on the same business trip | |
Only the first 10,000-mile car and van rate has changed. The 25p rate that applies above 10,000 miles is unchanged — it has actually sat at 25p since 2001. The motorcycle, bicycle and passenger rates are also unchanged.
What changed, and what stayed the same
The headline is simple: the 45p rate became 55p from 6 April 2026. That is a 10p-a-mile increase, the first since the 2011/12 tax year. The 10,000-mile threshold itself hasn't moved — once your cumulative business mileage for the year passes 10,000, the rate still drops to 25p for every mile after that.
Because the rates are set per tax year, the new 55p only applies to business miles driven on or after 6 April 2026. Miles you drove in 2025/26 are still valued at the old 45p.
Why the tax-free part matters so much
Payments up to the AMAP rate are free of both income tax and National Insurance. That is what makes mileage such an efficient way to be reimbursed compared with, say, a higher salary. If your employer pays you 55p a mile for 8,000 miles, that's £4,400 in your pocket with no tax and no NIC deducted — and the employer gets a deduction for it too.
The flip side: if you are paid more than the approved rate, the excess is taxable. So if an employer paid 65p a mile, the extra 10p on each mile would be treated as taxable pay (and would usually go through payroll or a P11D).
Who benefits from the higher rate
Three main groups gain:
- Employees who use their own car for site visits, client meetings or deliveries and are reimbursed at the AMAP rate.
- Directors of their own limited company who claim mileage from the company rather than running a company car. This is often more tax-efficient than a company car — we compare the two in our guide on the company car versus mileage for a limited company.
- The self-employed who use the simplified mileage method instead of claiming actual vehicle running costs. Sole traders claim the same flat rates against their profits. If that's you, see our walkthrough on claiming mileage allowance when self-employed.
Worked example: 12,000 business miles, before and after
Priya is a sales rep who uses her own car and drives 12,000 business miles in the tax year. Her employer reimburses her at the full approved rate. Here's how her tax-free mileage changes between 2025/26 (45p) and 2026/27 (55p).
2025/26 — old rate (45p / 25p):
- First 10,000 miles × 45p = £4,500
- Next 2,000 miles × 25p = £500
- Total tax-free mileage: £5,000
2026/27 — new rate (55p / 25p):
- First 10,000 miles × 55p = £5,500
- Next 2,000 miles × 25p = £500
- Total tax-free mileage: £6,000
Priya is £1,000 a year better off — and because it's all within the approved rate, every penny is free of income tax and National Insurance. The 2,000 miles above 10,000 are unaffected because the 25p rate didn't change.
Paid less than the rate? Claim Mileage Allowance Relief
Not every employer pays the full approved rate. Some pay 30p, some pay 40p, and some pay nothing at all for business journeys. If you're an employee in that position, you can claim Mileage Allowance Relief (MAR) on the shortfall through your tax return or a P87 claim.
MAR works on the gap between what you were paid and what you could have been paid at the AMAP rate. Say you drive 5,000 business miles in 2026/27 and your employer reimburses you at 30p a mile:
- Approved amount: 5,000 × 55p = £2,750
- Actually paid: 5,000 × 30p = £1,500
- Shortfall you can claim relief on: £1,250
You don't get £1,250 back in cash — you get tax relief on it. A basic-rate taxpayer would save 20% of £1,250 (£250); a higher-rate taxpayer would save 40% (£500). With the rate rising to 55p, the relief available on any shortfall is now bigger than before, so it's worth reviewing what your employer pays.
What employers and directors should do now
If you run a payroll or a company that reimburses mileage, update your expense policy and any mileage claim forms before the new tax year bites. A few practical steps:
- Change the default reimbursement rate from 45p to 55p for the first 10,000 miles.
- Make sure your expenses software or spreadsheet still drops to 25p once an employee passes 10,000 cumulative business miles in the year.
- Tell staff who claim mileage, so they update their own records from 6 April 2026.
- If you currently pay above the approved rate, remember the excess remains taxable and reportable.
Directors paying themselves should fold the new rate into how they extract money from the company — mileage sits alongside salary and dividends as a tax-efficient route. See our overview of how to pay yourself from a limited company.
A note on record-keeping
The mileage rules are generous, but they only work if you can back up the claim. Keep a log of each business journey: the date, the start and end points, the reason for the trip and the miles covered. Ordinary commuting from home to your normal workplace doesn't count as business mileage — only journeys made in the performance of your duties or to a temporary workplace qualify.
Sources
- GOV.UK — Travel: mileage and fuel rates and allowances
- GOV.UK — Expenses and benefits: business travel mileage for employees' own vehicles
- GOV.UK — Claim tax relief for your job expenses
- GOV.UK — Expenses if you're self-employed: vehicles
Frequently asked questions
When does the new 55p mileage rate start?
It applies from 6 April 2026, the start of the 2026/27 tax year. Business miles driven on or after that date are valued at 55p for the first 10,000 miles; miles driven in 2025/26 are still at the old 45p rate.
Does the rate stay at 55p for all my business miles?
No. The 55p rate applies only to the first 10,000 business miles in the tax year. Once your cumulative business mileage passes 10,000, the rate drops to 25p per mile for the rest of the year. The 25p rate is unchanged.
What if my employer pays me less than 55p a mile?
You can claim Mileage Allowance Relief on the difference between what you were paid and the approved amount. You don't get the shortfall back in cash — you get tax relief on it, worth 20% for a basic-rate taxpayer or 40% for a higher-rate taxpayer.
Can the self-employed use the new 55p rate?
Yes. Sole traders using the simplified mileage method claim the same flat rates — 55p for the first 10,000 business miles and 25p after — against their profits, instead of working out actual vehicle running costs.
