HMRC raise mileage rates and allowances

Chancellor Rachel Reeves announced an increase in HMRC’s approved mileage rates for cars and vans from April 2026 for the first time since 2011 in a speech to the House of Commons in May.

This news comes as a surprise to many businesses, as a review of the Approved Mileage Allowance Payment (AMAP) rate hadn’t been tabled.

What changes have been made to the Approved Mileage Allowance Payment rate?

The announcement of a higher 55p per mile rate for cars and vans for the first 10,000 miles is a 10p increase from the previous 45p per mile rate.

This rate still falls to 25p once a driver has covered more than 10,000 miles in a year.

Despite this welcome headline rise, the motorcycle mileage rate stays the same at 24p per mile and the bicycle rate remains at 20p per mile.

Employees can also claim 5p per passenger, per business mile for carrying passengers in their car or van.

How does the Approved Mileage Allowance Payment Rate affect employees?

If your employees travel for work in their own vehicle, they are able to claim back the money for every mile they have driven or cycled.

You can choose to reimburse employees above these rates but be aware that the excess is subject to tax and National Insurance.

If you are paying below these rates, employees may be able to claim tax relief on the shortfall, so it is worthwhile letting them know.

We recommend taking a moment to review your current mileage reimbursement policy.

If you’re unsure how these changes affect your business or want to check your payroll is set up correctly, we’re here to help.

Get in touch today for expert advice on tax relief.