HMRC Mileage Rate Rises to 55p a Mile — How Sole Traders and Employees Claim It Correctly

For the first time since 2011, HMRC's approved mileage rate has gone up — a change worth knowing about whether you're a sole trader, a limited company director, or an employee who uses your own car for work.

What's changed

The Mileage Allowance Payment (MAP) rate has risen from 45p to 55p per mile for the first 10,000 business miles in a tax year, for cars and vans, with the rate over 10,000 miles staying at 25p per mile. The change is backdated to 6 April 2026, so claims for the whole 2026/27 tax year use the new rate. Motorcycles remain at 24p per mile and bicycles at 20p per mile.

Why it matters

These rates set the maximum amount you or your employer can pay tax-free per business mile. If you're self-employed, you can deduct mileage from your taxable profit using this simplified expenses method instead of claiming actual running costs like fuel, insurance and depreciation separately — for many people, that's simpler and can work out to a similar or better deduction. If you're an employee using your own car and your employer pays less than the approved rate, you can claim Mileage Allowance Relief on the shortfall directly from HMRC.

Checklist: claiming mileage correctly

• Keep a mileage log recording date, destination, purpose and miles for every business journey — HMRC can ask for this if it queries a claim.
• Apply 55p per mile for the first 10,000 miles, then drop to 25p per mile for anything beyond that in the same tax year.
• If you're employed and your employer pays less than 55p per mile, calculate the gap and claim Mileage Allowance Relief via Self Assessment or a P87 form.
• Remember commuting from home to your normal workplace doesn't count — only genuine business journeys qualify.
• If you're self-employed and use simplified expenses, you can't also claim actual vehicle costs like fuel and servicing separately for that vehicle — pick one method and stick with it for that vehicle's life.
• Don't forget passenger payments — you can claim an extra 5p per mile if you carry a colleague on a business journey in your car.

How the UK compares internationally

Mileage rates that lag inflation are a common complaint. The US IRS standard mileage rate is adjusted annually and sat at 70 cents per mile for 2025, reviewed far more frequently than the UK's rate, which had been frozen for 15 years before this rise. Australia's ATO cents-per-kilometre method is also reviewed each financial year. The UK's approach of infrequent, larger jumps rather than small annual adjustments means UK claimants can go long periods being under-compensated relative to actual running costs before a correction like this one arrives.

Key Numbers

• 55p — new mileage rate per mile for the first 10,000 business miles
• 25p — rate per mile above 10,000 miles
• 10 — years since the last rate increase in 2011
• 6 April 2026 — backdated effective date of the new rate

Sources

• ATT: Increased HMRC approved mileage rates for business travel announced
• Capture Expense: HMRC Mileage Rates 2026/27
• GOV.UK: Simplified expenses — vehicles
• GOV.UK: Tax relief for employees — vehicles you use for work

Educational content only — not financial advice.