HMRC mileage rates for 2026/27: 55p a mile from 6 April 2026
For the 2026/27 tax year, HMRC's approved mileage rate for cars and vans is 55p a mile for the first 10,000 business miles and 25p a mile above that. Announced on 21 May 2026 and enacted by section 2 of the Taxation (Energy and Vehicles) Act 2026, the 55p rate replaces 45p and applies from 6 April 2026. Self-employed simplified expenses and the National Insurance qualifying amount use the same 55p.
What are the HMRC mileage rates for 2026/27?
Employees who use their own vehicle for business journeys can receive tax-free Approved Mileage Allowance Payments up to these rates per business mile: 55p for the first 10,000 miles in a car or van and 25p above, 24p on a motorcycle and 20p on a bicycle. Carrying fellow employees on their own work journeys adds up to 5p per passenger per business mile, free of tax and National Insurance. Only the first-band rate for cars and vans has changed since 2025/26. Electric and hybrid cars sit in the car and van category, so a Tesla you own earns the same 55p and 25p.
Why does the 55p rate start on 6 April 2026?
Section 2 of the Taxation (Energy and Vehicles) Act 2026 replaces 45p with 55p in the employment income and trading income rules for 2026/27 and subsequent tax years, so the new rate reaches back to the first day of the tax year. The government announced the increase on 21 May 2026 as part of a package responding to high fuel prices, HMRC published its policy paper on 17 June 2026 and the Act received Royal Assent on 15 July 2026. HMRC's August 2026 Employer Bulletin confirms the backdating and tells employers that tax or National Insurance deducted on payments between 45p and 55p can be corrected through payroll.
How does the new rate change an employee's claim?
The approved amount rises by 10p for each of the first 10,000 business miles: on 12,000 business miles in 2026/27 it is £6,000 (10,000 x 55p + 2,000 x 25p), up from £5,000 at the 2025/26 rate. Mileage payments up to the approved amount are tax-free, and any excess is taxable pay reported on the P11D. When your employer pays less, you can claim Mileage Allowance Relief on the difference through HMRC's tax relief service or your Self Assessment return, for the current tax year and the 4 previous years. An employer still paying 45p a mile pays £5,400 on those 12,000 miles, which leaves £600 of relief, worth £120 in tax at 20% or £240 at 40%. HMRC expects the claim to rest on a log giving the reason for every journey and its start and end postcodes. Commuting to a permanent workplace never counts as business mileage.
What should employers check?
The 10,000-mile threshold applies per employee and per tax year (6 April to 5 April), with the business miles of all the employee's cars and vans added together. For National Insurance, the qualifying amount is 55p for every business mile from 6 April 2026 (45p before), with no 10,000-mile band, and motoring payments above it are Class 1 earnings. Paying less than the qualifying amount gives the employee no National Insurance relief. Employers keep PAYE records, taxable expenses and benefits included, for 3 years from the end of the tax year.
How do sole traders use the 2026/27 rate?
Simplified expenses use the same figures from 6 April 2026: 55p a mile for the first 10,000 business miles in a car or goods vehicle, 25p above and 24p for a motorcycle. GOV.UK gives the example of 11,000 business miles in 2026/27: 10,000 x 55p + 1,000 x 25p = £5,750. The flat rate covers the running costs of the vehicle, charging an electric car included, and parking, tolls and train fares are claimed on top. A vehicle that has already received capital allowances cannot use the flat rate, and once you use it for a vehicle you keep it while that vehicle stays in the business. Limited companies cannot use the scheme. Making Tax Digital for Income Tax applies from 6 April 2026 above £50,000 of qualifying income, from 6 April 2027 above £30,000 and from 6 April 2028 above £20,000, so your mileage totals then feed quarterly updates.
Will the rates change after 2026/27?
HMRC's policy paper says the government will set out its review of mileage rates beyond 2026/27 at Budget 2026, scheduled for Wednesday 28 October 2026. The Act sets 55p for 2026/27 and subsequent tax years, so the rate stays in force until Parliament changes it. Check GOV.UK for any 2027/28 figures after the Budget before you fix next year's reimbursement policy.
Sources
- Travel: mileage and fuel rates and allowances GOV.UK (HMRC)
- Increasing mileage rates (policy paper, 17 June 2026) HMRC
- Taxation (Energy and Vehicles) Act 2026, section 2 legislation.gov.uk
- Expenses and benefits: business travel mileage for employees' own vehicles (rules for tax) GOV.UK (HMRC)
- Expenses and benefits: business travel mileage for employees' own vehicles (rules for National Insurance) GOV.UK (HMRC)
- August 2026 Employer Bulletin (mileage payment changes) HMRC
- Claim tax relief for your job expenses: vehicles you use for work GOV.UK (HMRC)
- Simplified expenses if you're self-employed (vehicles) GOV.UK (HMRC)
- Check if you're eligible for Making Tax Digital for Income Tax GOV.UK (HMRC)
- PAYE and payroll for employers: keeping records GOV.UK
- Budget 2026 GOV.UK (HM Treasury)
FAQ
What is the HMRC mileage rate for 2026/27?+
55p a mile for the first 10,000 business miles in a car or van, then 25p a mile, from 6 April 2026. Motorcycles stay at 24p, bicycles at 20p and passenger payments at 5p per passenger per business mile.
Does the 55p rate apply to electric cars?+
Yes, when the car is your own. HMRC's manual EIM31240 includes electric and hybrid cars in the car and van category. A fully electric company car uses the Advisory Electricity Rate: 7p a mile for home charging and 15p for public charging from 1 September 2026.
My employer paid 45p a mile after 6 April 2026. Can I recover the difference?+
Yes. The 55p rate covers the whole 2026/27 tax year, so you can claim Mileage Allowance Relief on any gap between what your employer paid and the approved amount. If your employer paid more than 45p and deducted tax or National Insurance on the part above 45p, HMRC lets the employer correct those deductions through payroll.
The 55p rate pays out on business miles you can prove. Odoproof records each Tesla journey automatically with its date, distance and postcodes, ready for a claim at 2026/27 rates. Start your 7-day free trial.
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