HMRC Approved Mileage Rates 2026/27
HMRC has updated its Approved Mileage Allowance Payments for the 2026 to 2027 tax year, and the headline change is a welcome one for employees using their own cars or vans for business travel. From 6 April 2026, the approved rate for cars and vans increased to 55p per mile for the first 10,000 business miles in the tax year, up from the previous 45p rate. The rate for each business mile over 10,000 remains 25p per mile.
For businesses, this is more than a payroll update. Mileage rates affect employee reimbursements, tax reporting, National Insurance treatment, expense policies, and employee expectations. Here is what has changed, what stays the same, and what employers and employees should do now.
The HMRC Approved Mileage Rates 2026/27 this tax year are:
Cars & Vans: 55p -> 25p every mile after 10,000 miles
Motorbikes: 24p -> 24p every mile after 10,000 miles
Bicycles: 20p -> 20p every mile after 10,000 miles
HMRC’s updated guidance also confirms that passenger payments for cars and vans remain at 5p per passenger per business mile when an employee carries fellow employees on journeys that are also work journeys for those passengers.
The main change is the increase for cars and vans for the first 10,000 business miles. Between the 2011/12 tax year and the 2025/26 tax year, the rate for cars and vans was 45p per mile for the first 10,000 business miles and 25p per mile after that. For 2026/27, the first 10,000-mile rate has risen to 55p per mile. Motorcycle and bicycle rates remain unchanged.
That means an employee driving 8,000 business miles in their own car during 2026/27 could receive up to £4,400 tax-free in approved mileage payments:
8,000 miles x 55p = £4,400
For an employee driving 12,000 business miles in their own car, the tax-approved amount would be:
10,000 miles x 55p = £5,500
2,000 miles x 25p = £500
Total approved amount = £6,000
Approved Mileage Allowance Payments, often shortened to AMAPs, are the tax-free mileage amounts employers can pay employees who use their own vehicle for business journeys. HMRC explains that employers can pay employees an “approved amount” each year without reporting it to HMRC, and that amount is calculated by multiplying business miles by the correct rate for the vehicle.
These rates are designed to cover the cost of owning and running the employee’s vehicle. That includes costs such as fuel or electricity, vehicle tax, MOTs and repairs, so employees cannot claim those costs separately when using the approved mileage rate.
Business mileage generally means travel that an employee has to do as part of their work. Ordinary commuting between home and a regular workplace does not count, unless the journey is to a temporary workplace.
Examples of business journeys may include visiting a client, travelling between work sites, attending an off-site meeting, or driving to a temporary workplace. The key point is that the journey must be required for work, not simply travel to and from the employee’s normal place of work.
If an employer pays more than the approved amount, the excess must be reported and treated as taxable. HMRC guidance says employers must report anything above the approved amount on form P11D and add the excess to the employee’s pay, deducting and paying tax as normal.
For example, if the approved amount is £4,400 but the employer pays £4,800, the extra £400 would be taxable.
If an employer pays less than the approved amount, there is no extra tax or reporting requirement for the employer. However, the employee may be able to claim Mileage Allowance Relief on the difference between what they received and the approved amount.
For example, if an employee drives 5,000 business miles in their own car during 2026/27, the approved amount is £2,750. If their employer reimburses them at 40p per mile, they receive £2,000. The employee may be able to claim tax relief on the £750 shortfall, subject to HMRC’s rules.
Employees can claim for the current tax year and the previous four tax years if they are eligible, and HMRC requires mileage records when making a claim.
Employers should note that tax and National Insurance use separate mileage rules. HMRC’s National Insurance guidance states that, from 6 April 2026, the qualifying amount for cars and vans is 55p for every business mile. For motorcycles it is 24p per mile, and for bikes it is 20p per mile.
If relevant motoring expenditure paid to an employee exceeds the National Insurance qualifying amount, the excess is added to earnings for Class 1 National Insurance purposes. If the payment is below the qualifying amount, there is no National Insurance to pay, but there is also no Mileage Allowance Relief equivalent for National Insurance.
No. The approved mileage rates discussed above apply when employees use their own vehicle for business journeys. Company cars are covered by separate Advisory Fuel Rates. HMRC states that Advisory Fuel Rates only apply to employees using a company car, and they are used when reimbursing business travel in company cars or when employees repay private fuel costs.
This is an important distinction. An employee using their own car may be reimbursed using the AMAP rates. An employee using a company car should usually be handled under the Advisory Fuel Rates or actual fuel and electricity cost rules.
Employees should keep accurate mileage records throughout the year. HMRC says mileage logs used for claims must include the reason for every journey, the start postcode, and the end postcode. Employees should also keep dates and mileage for work journeys and deduct any mileage allowance already paid by their employer.
Employers should review expense policies, payroll systems and employee guidance for the 2026/27 tax year. Any policy still referring to 45p per mile for the first 10,000 miles should be updated for cars and vans from 6 April 2026.
It is also worth communicating the difference between own-vehicle mileage rates and company car Advisory Fuel Rates. Confusing the two can lead to incorrect reimbursements, avoidable payroll adjustments, or unexpected tax and National Insurance consequences.
For 2026/27, the most important HMRC mileage update is the rise in the approved cars and vans rate to 55p per mile for the first 10,000 business miles. The rate above 10,000 miles remains 25p, while motorcycles stay at 24p and bicycles at 20p. Employers should update their systems and policies, and employees should keep detailed mileage logs to support any reimbursement or tax relief claim.
Disclaimer: This article is for general information only and should not be treated as tax advice. Businesses and individuals should check HMRC guidance or speak to a qualified adviser before making decisions. You can contact us here
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