If you drive your own car or van for business, this is worth two minutes of your time.

From 6 April 2026, the HMRC-approved mileage rate for cars and vans has risen from 45p to 55p per mile for the first 10,000 business miles in the tax year. It's the first change to this rate since 2011, having stayed frozen for 15 years despite rising fuel, insurance, and running costs.

What's actually changed

Cars and vans: 45p → 55p per mile (first 10,000 business miles), then 25p per mile after that, unchanged
Motorcycles: stays at 24p per mile
Bicycles: stays at 20p per mile
Electric and hybrid cars: follow the same 55p/25p rate — there's no separate rate for EVs

This is the rate at which employers can reimburse employees tax-free for business mileage, and the rate self-employed people can use to claim mileage as a business expense.

What this means in cash terms

An employee or director driving 8,000 business miles a year can now be reimbursed £4,400 tax-free, up from £3,600 under the old rate. That's an extra £800 in their pocket, with no tax or National Insurance to pay on it.

If you're an employer

Check your expense policy and payroll system. Many are still set to the old 45p rate by default. If you've reimbursed staff at 45p since 6 April, you can top up the difference — 10p per mile — tax-free.

If you're employed and reimbursed less than 55p

You can claim the shortfall back as Mileage Allowance Relief, either through Self Assessment or form P87. For example, a basic rate taxpayer reimbursed at 45p who drives 5,000 business miles could claim relief on the 10p gap — worth around £100 back.

If you're self-employed

You can now deduct mileage from your taxable profit at the new 55p rate using the simplified expenses method, rather than tracking individual fuel and running costs.

One thing to watch

You can't claim mileage at the approved rate and separately claim fuel, insurance, or servicing costs — the mileage rate already covers all of that. Double-claiming is one of the most common errors HMRC picks up on.

We're here to help

If you're not sure whether your business is applying the new rate correctly, or how much you could be claiming, get in touch and we'll take a quick look.

This article is for general information only and is not tax advice. Please contact Zara Accountants to discuss your own circumstances.