What’s Changed in Mileage Rates
In one of the most significant changes in recent years, the UK government uprated mileage rates by 10 pence per mile for tax purposes, backdated to April 2026. Specifically, the rate for the first 10,000 business miles driven using your own vehicle increased from 45p to 55p per mile. This affects employees and the self-employed, saving around £120 annually for a worker doing 6,000 business miles. (gov.uk)
Who is Affected
- Self-employed individuals and sole traders using personal vehicle for business purposes.
- Employees claiming mileage expenses from employers under HMRC’s approved mileage allowance payments (AMAPs).
- Workers in industries with high travel: tradespeople, haulage, sales, care workers, etc.
How to Claim & Compliance
- Keep accurate mileage logs: date, destination, purpose, miles driven. Use apps or paper records—just ensure they’re clear and auditable.
- If employed, make sure employer uses the updated rate when reimbursing, or if reimbursed less, you may claim via a tax relief claim.
- Self-employed people should include mileage and maintain records in their profit & loss statements for Self Assessment.
Example Calculations
| Scenario | Miles driven | Old rate saving vs. no reimbursement | New rate saving |
|---|---|---|---|
| John, self-employed plumber: 5,000 business miles/year | 5,000 × 55p = £2,750 | Under old 45p, £2,250, so •£500 increase | |
| Sarah, employee driving 8,000 miles reimbursed by employer | Employer paying 55p: £4,400; if employer pays less, she claims relief on difference | ||
| Mixed use (say half business miles) | Only business portion counts; ensure apportionment is clear |
Potential Pitfalls & Caveats
- Record keeping: HMRC may request evidence; poor documentation can lead to denied claims.
- Employer reimbursements vs. tax reliefs: If employers don’t adjust rates, employees may need to claim via Self Assessment or employment expenses rules.
- Mixed usage & private use: Only business miles qualify. If the vehicle has mixed business/private usage, apportionment is essential.
Practical Steps to Maximise Benefit
- Review your current travel patterns to estimate how much increase you will receive under the new rate.
- Update your accounting or expense software to reflect 55p per mile for first 10,000 business miles as of 6 April 2026.
- Discuss with your employer to ensure they adopt the new rate, reducing need for relief claims.
- Self-employed workers: include mileage in profit calculations, keeping precise logs and receipts for fuel where needed for substantiation.
Broader Impact
This change is part of the government’s measures to ease the cost of living and support transport-intensive businesses. Along with the extension of the fuel duty freeze and relief to red diesel users, it helps shield workers, hauliers and businesses from rising costs. (gov.uk)