HMRC Increases Approved Mileage Rates for 2026/27 – First Rise in 15 Years

The Government has announced an increase to HMRC’s approved mileage allowance rates for the 2026/27 tax year, with the changes backdated to 6 April 2026.

This marks the first increase in approved mileage rates in 15 years and comes as welcome news for employers, employees, and self-employed individuals facing rising motoring and operating costs.

New Approved Mileage Rates

The updated HMRC approved mileage allowance payments (AMAPs) for cars and vans are:

• 55p per mile for the first 10,000 business miles

• 25p per mile for business mileage over 10,000 miles

These rates apply from 6 April 2026 onwards.

What This Means for Employers

Employers who reimburse staff for business travel should review their current mileage policies and payroll processes to ensure they adhere to new approved rates.

If payrolls have already been processed since April 2026 using the previous mileage rates, businesses can:

• Review business mileage reimbursements already paid

• Consider making additional payments to employees where appropriate

• Update payroll and expense systems going forward

Using HMRC’s approved rates can help simplify expense reporting and ensure reimbursements remain tax-free within the approved limits.

What This Means for Employees

Employees who receive mileage reimbursements below HMRC’s approved rates may still be entitled to claim tax relief on the difference through HMRC.

For example, if an employee is reimbursed at a lower rate than the approved amount, they may be able to submit a mileage allowance relief claim for the shortfall.

HMRC is currently updating its job expenses claim forms to reflect the revised rates, with further guidance expected shortly.

Impact on the Self-Employed

Self-employed individuals using the simplified mileage method will also be able to use the updated rates when completing their 2026/27 tax returns.

Key filing deadlines are:

• 31 October 2027 for paper tax returns

• 31 January 2028 for online tax returns

A Welcome Change After Years of Rising Costs

With fuel, insurance, servicing, and general vehicle running costs having increased significantly over recent years, many businesses and workers will see this change as long overdue.

The increase provides greater support for those regularly using their own vehicles for work purposes and may help businesses better reflect the true cost of business travel.