Business Mileage at 55p: How the New Rate Works and How to Claim It

From 6 April 2026, the HMRC approved mileage rate for business travel using a personal vehicle increased from 45p to 55p per mile for the first 10,000 miles. This is the first increase to this rate since 2011 — a 22% jump that the government has acknowledged is overdue given rising fuel and vehicle costs.

If you use your own car, van, or motorcycle for work purposes, this change directly affects how much tax relief or expense reimbursement you can claim. Here's everything you need to know.

What the Mileage Rate Is (and Isn't)

The HMRC Approved Mileage Allowance Payments (AMAP) rate is a simplified way to claim the cost of using a personal vehicle for business travel. Rather than keeping receipts for fuel, insurance, servicing, tyres, and depreciation, you simply multiply your business miles by the approved rate.

The rates from 6 April 2026 are:

• Cars and vans: 55p per mile for the first 10,000 miles; 25p per mile after
• Motorcycles: 24p per mile (unchanged)
• Bicycles: 20p per mile (unchanged)

These rates apply equally whether you're a sole trader, a limited company director, or an employee claiming unreimbursed business mileage. The AMAP system is designed so that you are not taxed on payments up to this rate — and you can claim relief on the difference if your employer pays you less.

Who Can Use the Simplified Mileage Method

Sole traders and the self-employed can claim the AMAP rate instead of calculating actual vehicle costs, provided they use the simplified expenses method from the start of ownership of the vehicle (you can't switch methods mid-ownership for the same vehicle).

Employees whose employer doesn't reimburse business mileage, or reimburses at a rate below 55p per mile, can claim Mileage Allowance Relief (MAR) via their Self Assessment return or through a P87 form.

Limited company directors can have their company pay them at the AMAP rate for business mileage. The payment is tax-deductible for the company and tax-free for the director. If the company pays less, the director can claim MAR personally; if it pays more, the excess is a taxable benefit.

What qualifies as business mileage? Travel from your workplace to a client, between business premises, or to attend a business event. It does not include your ordinary commute from home to your regular place of work — this is a common and costly mistake.

How Much Is the Rate Change Worth?

For a self-employed person driving 8,000 business miles per year, the change from 45p to 55p adds an extra £800 in deductible expenses annually. At a basic tax rate of 20%, that translates to around £160 in tax savings per year. At the higher rate of 40%, the saving is £320.

For employees, the calculation is similar via MAR — but it requires filing through Self Assessment or submitting a P87 form, which some employees are unaware of.

Keeping Records

HMRC requires a mileage log that records the date, start and end point, purpose of journey, and miles covered for every business trip. A simple spreadsheet works, but apps like MileIQ, TripLog, or built-in features in QuickBooks and FreeAgent can track this automatically using your phone's GPS.

In the US, the IRS standard mileage rate for 2026 is 70 cents per mile for business use — higher than the UK rate but on a different tax framework. In Australia, the ATO cents-per-kilometre method is 88 cents/km (roughly 55p/mile).

Step-by-Step Checklist

• Identify your qualifying business mileage from 6 April 2026 onwards — review appointments, client visits, and supplier trips
• Decide on a tracking method: spreadsheet, or a GPS mileage app for automatic logging
• Ensure your log records: date, journey start and end, business purpose, total miles
• Sole traders: use the simplified mileage method in your next MTD quarterly update or Self Assessment return — claim at 55p per mile up to 10,000 miles
• Employees: if your employer pays under 55p per mile, or nothing at all, claim MAR via Self Assessment or a P87 form
• Limited company directors: ensure your company's mileage reimbursement policy is updated to the new 55p rate

Key Numbers

• 55p: HMRC approved mileage rate from 6 April 2026 (first 10,000 miles)
• 25p: rate per mile over 10,000 business miles per year
• £800: extra deductible expenses for someone driving 8,000 business miles vs. the old 45p rate
• 2011: the last time the HMRC mileage rate was changed before 2026

Sources

• Gov.uk: HMRC Approved Mileage Allowance Payments
• Gov.uk: Tax relief for employees — vehicles
• Gov.uk: Simplified expenses for the self-employed
• Naseems Accountants: Business news July 2026

Educational content only — not financial advice.