If you have reimbursed staff for business mileage this tax year, the figure you used until late May was almost certainly wrong. HMRC's approved mileage rate jumped to 55p per business mile, and the change is backdated to the start of the tax year. That means most employers owe their drivers a top-up, and the window to sort it cleanly is the next payroll run.
TL;DR: The approved mileage allowance payment (AMAP) rate rose from 45p to 55p per business mile for the first 10,000 miles, effective 6 April 2026. The rate after 10,000 miles stays at 25p. It is the first change since 2011. Employers can pay 55p free of tax and National Insurance, and can top up earlier payments made at 45p.
What Changed in the HMRC Mileage Rate for 2026?
The headline rate for approved mileage allowance payments rose to 55p per business mile for the first 10,000 miles in a tax year, up from 45p. Anything over 10,000 miles stays at 25p (Ross Martin, 2026).
This is the first increase since 2011, so the 45p rate had been frozen for 15 years (ICAEW, 2026). The Chancellor announced the 10p uplift on 21 May 2026 as part of a package responding to fuel costs, but legislated for it to apply from 6 April 2026.
The other approved rates did not move. Motorcycles stay at 24p per mile, bicycles at 20p, and the passenger supplement at 5p per mile for each colleague carried on the same business trip (GOV.UK).
Who Is Affected by the New 55p Rate?
Three groups feel this change. Employers who reimburse staff for using their own car or van, employees who claim mileage relief because their employer pays below the approved rate, and self-employed sole traders who use simplified expenses.
The rate only applies to an employee's own vehicle. It does not touch company cars, where fuel reimbursement runs on a separate quarterly system (more on that below). For a typical office or trades business with a handful of staff doing client visits and site runs, the practical effect is straightforward: the tax-free amount you can pay per mile went up by 10p.
What we see most often is a business that updated the rate in its expense software the week the news broke, then forgot the claims already paid in April and early May at the old 45p. Those need revisiting.
What You Owe Employees You Already Paid at 45p
Because the rise is backdated to 6 April 2026, every business-mile payment made between then and the announcement was likely processed at 45p. You can pay the 10p shortfall on those miles now, and it stays free of Income Tax and National Insurance (HaysMac, 2026).
You are not legally forced to backdate the top-up, but the employee can claim the difference from HMRC themselves through mileage allowance relief if you do not. In our experience the cleaner route is to pay the catch-up through payroll or expenses, because it avoids your staff filing individual claims and keeps your records consistent.
One scenario needs more care. If you previously paid above 45p and treated the excess as taxable pay, you may need to re-run the affected payroll periods so the now tax-free amount is corrected. Anything still paid above 55p stays reportable, much like the items covered in our P11D filing guide, so check what you reported on the full payment submission before adjusting.
Does the New Rate Apply to National Insurance?
Yes, and the practical answer is simple: you can reimburse 55p per business mile free of both Income Tax and National Insurance. The mechanics underneath differ slightly between the two taxes.
For Income Tax, the approved amount is 55p for the first 10,000 business miles, then 25p. For National Insurance, the qualifying amount uses a single rate across all business miles, with no drop after 10,000, and that rate is now 55p (Ross Martin, 2026).
For the vast majority of employees who do under 10,000 business miles a year, none of that nuance matters in practice. Pay 55p, report nothing, and there is no tax or NIC to account for. The split only becomes relevant for high-mileage drivers crossing the 10,000-mile line.
How Do the Self-Employed Use the New Rate?
Sole traders and partners who use simplified expenses can claim the same rates: 55p per mile for the first 10,000 business miles in the accounting period, then 25p (IPSE, 2026).
Simplified mileage is an alternative to claiming a proportion of actual running costs such as fuel, insurance, servicing, and capital allowances on the vehicle. Once you choose the simplified method for a particular vehicle, you have to stick with it for as long as you use that vehicle in the business.
The uplift makes the simplified route more attractive for anyone clocking up business miles in their own car. If you keep digital records of your trips, the change is easy to apply at year end. Our guide to MTD record keeping for sole traders covers how to log mileage in a way that holds up.
What Employers Should Do Before the Next Payroll Run
Start by updating the rate in your expense and payroll software to 55p, then list every business-mile claim paid since 6 April so you can calculate the catch-up. One question clients always ask is whether a formal policy update is needed, and the answer is yes if your staff handbook quotes the old 45p figure.
A few practical steps:
- Reissue or amend your mileage expense policy to reference 55p and the 6 April 2026 effective date.
- Decide whether to top up backdated claims through payroll or expenses, and tell affected staff which route you are using.
- Keep the distinction clear between own-vehicle mileage (now 55p) and company-car fuel, which runs on advisory fuel rates and is unaffected.
If you are reviewing payroll figures anyway, our National Living Wage payroll checklist covers the other 2026 rate changes worth checking in the same run. And if your business runs company cars, our guide to VAT fuel scale charges for 2026-27 explains the separate rules that apply when the business pays for fuel.
Frequently Asked Questions
What is the new HMRC mileage rate for 2026?
The approved mileage allowance payment rate is 55p per business mile for the first 10,000 miles in a tax year, then 25p per mile above that. It applies to cars and vans and took effect from 6 April 2026. Motorcycle (24p), bicycle (20p), and passenger (5p) rates are unchanged.
Do I have to backdate mileage payments to April 2026?
You are not obliged to top up payments already made at 45p, but the employee can claim the 10p difference from HMRC through mileage allowance relief. Most employers find it tidier to pay the shortfall through payroll or expenses, which keeps records consistent and saves staff filing individual claims.
Does the 55p rate affect company cars?
No. The 55p rate is for employees using their own vehicle. Company-car fuel is reimbursed using HMRC's advisory fuel rates, a separate set of pence-per-mile figures updated quarterly. Those rates were not changed by this announcement, so check the current advisory fuel rate for the engine size and fuel type.
Can the self-employed claim 55p per mile?
Yes. Sole traders and partners using simplified expenses can claim 55p per business mile for the first 10,000 miles in the accounting period, then 25p. This is an alternative to claiming a share of actual vehicle running costs, and you must keep the same method for that vehicle once you start.
When was the mileage rate last changed?
Before this increase, the 45p rate had stood since 2011. The rise to 55p, announced on 21 May 2026, is the first change in 15 years, which is why so many expense policies and payroll setups still quoted the old figure when it took effect.
Not sure whether you owe staff a backdated top-up, or how to correct payroll periods already filed at 45p? Get in touch - we handle payroll and expenses for businesses across the UK and can review your mileage records before your next run.