Tax Planning
How the Increase in Approved Mileage Allowance Payments Affects Self-Employed and Employees
From 6 April 2026, Approved Mileage Allowance Payments (AMAPs) for cars and vans rose sharply—learn exactly who benefits, how to apply the new 55p rate, and how to use it to reduce your tax bill.
By NomadicTax Research Team • 5-8 min read • July 9, 2026
## What’s Changed?
During Summer 2026, the UK government increased the **Approved Mileage Allowance Payment** (AMAP) rate for cars and vans for the first 10,000 business miles from **45p to 55p per mile**, effective from **6 April 2026**. Mileage over that threshold remains at **25p**. ([commonslibrary.parliament.uk](https://commonslibrary.parliament.uk/research-briefings/cbp-9742/?utm_source=openai))
## Who’s Affected?
- **Employees** who use their own car or van for business travel and whose employer reimburses them using the approved mileage rates.
- **Self-employed individuals** and contractors making business travel claims.
- **Employers** who use these rates for reimbursement—this impacts payroll and expense calculations.
## Tax & NI Implications
- Payments at or below the approved rates can be made **tax-free**—no Income Tax or National Insurance (NI) on the payment portion that matches AMAPs. Employers should ensure reimbursements follow HMRC’s guidance to avoid liabilities. ([commonslibrary.parliament.uk](https://commonslibrary.parliament.uk/research-briefings/cbp-9742/?utm_source=openai))
- Excess payments over AMAP rates become taxable or need to be reported (via P11D or payroll). Employees should save mileage records, dates, journeys to satisfy HMRC’s conditions.
## Example Scenarios
- **Scenario A**: Alice, a salesperson employed full-time, drives 12,000 business miles in the tax year. First 10,000m at 55p = **£5,500**, next 2,000m at 25p = **£500**. If employer reimburses exactly that, it’s all tax-free.
- **Scenario B**: Bob is self-employed; he incorporates these reimbursements into his expense claims. He needs digital records; reimbursement or claim aligned to 55p/25p reduces his taxable profits.
- **Scenario C**: Carla (employee) receives 60p/mile from employer for first 10,000 miles—£0.05 in excess for each of those miles is taxable. Employer may withhold via payroll or report through P11D.
## Actionable Steps
1. **Update payroll systems**: ensure HMRC forms/software use 55p for first 10,000 miles.
2. **Track mileage carefully** including date, purpose, and miles per journey.
3. **Review your reimbursements or contracts** if rates paid are below AMAPs you could claim additional relief.
4. **Self-employed must use digital record-keeping**, especially under Making Tax Digital (see related articles).
## Why It Matters
This change boosts take-home pay for many doing significant business travel. It also aligns AMAPs more closely with actual motoring costs—fuel, insurance, maintenance—that have risen since last changes. But for employers, it adds complexity and potential payroll exposure if they don’t implement correctly.
Using the new rates accurately offers significant tax savings and helps avoid penalties or unexpected tax demands.