HMRC Increases Mileage Rates: What Employers Need to Know

Businesses that reimburse employees for business mileage should be aware of important changes to HMRC’s Approved Mileage Allowance Payments (AMAPs).

From 6 April 2026, the approved mileage rate for employees using their own cars or vans for business journeys increased from 45p to 55p per mile for the first 10,000 business miles travelled in a tax year. The rate for mileage above 10,000 miles remains unchanged at 25p per mile.

The increase represents the first change to the main mileage rate in over 15 years and reflects the rising costs associated with motoring.

What are Approved Mileage Allowance Payments?

Approved Mileage Allowance Payments (AMAPs) are the maximum amounts employers can pay employees for business travel in their own vehicles without creating an Income Tax or National Insurance liability.

The rates are intended to cover the costs of fuel, vehicle maintenance, insurance, servicing and general wear and tear associated with business use.

Employees who receive less than the approved rate may be able to claim Mileage Allowance Relief from HMRC on the difference.

Updated HMRC Mileage Rates

The approved rates from 6 April 2026 are:

Vehicle Type	Rate
Cars and vans (first 10,000 business miles)	55p per mile
Cars and vans (over 10,000 business miles)	25p per mile
Motorcycles	24p per mile
Bicycles	20p per mile

What Should Employers Do?

Businesses should review their mileage reimbursement policies and processes to ensure they reflect the updated rates.Key areas to consider include:

• Reviewing employee expense policies and guidance
• Updating mileage claim forms and expense systems
• Checking payroll processes where mileage payments are processed through payroll
• Communicating any changes to employees who regularly travel for business purposes
• Ensuring accurate records are maintained to support mileage claims

While employers are not required to pay the maximum approved rate, many businesses choose to do so to ensure employees are fairly reimbursed for business travel costs.

What About Company Cars?

The increase applies only to employees using their own vehicles for business journeys. Employees driving company cars are subject to separate HMRC Advisory Fuel Rates, which are used when reimbursing business fuel costs or calculating repayments for private fuel use. Employers operating company car fleets should ensure they are using the latest HMRC fuel rates when processing claims.

How Can We Help?

Managing employee expenses and mileage claims can become increasingly complex as rates and regulations change. Our payroll specialists can help businesses review their mileage reimbursement arrangements, update payroll processes and ensure compliance with HMRC requirements.

If you would like to discuss how these changes may affect your organisation get in touch.