How HMRC’s New 55p Mileage Rate Rule Change Affects Your Business Expenses

Fifteen Years. HMRC Finally Blinked.

The approved mileage rate for cars and vans has been 45p per mile since 2011.

Fifteen years! In that time, we’ve had six Prime Ministers, a global pandemic, a cost of living crisis, the rise of AI, several versions of “the cloud”, and more accounting software updates than any sensible person should have to emotionally process. Petrol has gone up, insurance has gone up, and the cost of running a car has gone up. The mileage rate, however, sat at 45p like it was waiting for a bus that never came.

From 6 April 2026, that changes. HMRC has increased the approved mileage allowance payment rate for cars and vans from 45p to 55p per mile for the first 10,000 business miles in a tax year. The rate above 10,000 miles stays at 25p. The announcement came from Chancellor Rachel Reeves, and frankly, we’ll take it.

If you use your own car or van for business travel, or if you run a company that reimburses directors or staff for business journeys, this change is relevant to you. And crucially, it’s backdated to 6 April 2026, which means some of you are already underclaiming without knowing it.

That’s what this article is about.

What Are Approved Mileage Allowance Payments?

Approved mileage allowance payments (AMAP rates to anyone who enjoys a good acronym) are HMRC’s approved rates for reimbursing employees and directors who use their own vehicle for business travel.

The concept is simple enough: if you use your own car for work, you’re covering fuel, wear and tear, insurance, tyres, and everything else out of your own pocket. The AMAP rates represent what HMRC considers a reasonable per-mile reimbursement for those costs. If a company reimburses you up to those rates, there’s no tax or National Insurance to worry about. If they pay more, and the excess may become taxable. If they pay less, and the individual may be able to claim relief on the shortfall.

From 6 April 2026, the rates are:

Vehicle	First 10,000 Business Miles	Above 10,000 Business Miles
Cars and vans	55p per mile	25p per mile
Motorcycles	24p per mile	24p per mile
Bicycles	20p per mile	20p per mile

HMRC’s full guidance is available on GOV.UK, including the travel and subsistence expenses section which covers mileage allowances in detail.

Why The Backdating Is The Bit That Actually Matters

Here’s where it gets practical.

The new 55p rate doesn’t apply from the date you first heard about it. It applies from 6 April 2026, the start of the 2026/27 tax year. That means if you’ve already recorded business miles since April and used 45p, your records are out of date.

Let’s put a number on it. Say you’re a director who drove 500 business miles between April and the end of May. You claimed:

500 miles × 45p = £225

At the new rate, that should be:

500 miles × 55p = £275

That is £50 your company has not yet reimbursed you. And it is £50 of business expense the company has not yet deducted against its Corporation Tax liability. Multiply that across a full year of regular business driving, and the numbers become more meaningful.

Take an electrician based in Dudley running residential and commercial jobs across the region. A morning call-out to a house in Stourbridge, then across to a retail unit at Merry Hill, then over to a commercial fit-out at the Pensnett Trading Estate in Kingswinford, then back to quote a rewire in Wolverhampton. Days like that add up fast. A realistic mix of service calls, fault-finding jobs, and commercial installs across the Black Country and Birmingham can comfortably put a sole trader or limited company director past 10,000 business miles in a tax year.

At the new 55p rate, that is £5,500 received tax-free from the company. Under the old 45p rate, it was £4,500. Same van, same roads, same jobs. The only difference is the rate.

SCCS tax clinic note: The backdating is the part most people miss. Bookkeeping software, expense apps, and spreadsheets won’t update themselves. If 45p is still hardcoded anywhere in your process, the underclaim quietly builds up every week. Review your mileage records from 6 April now. It’s a much smaller job to fix in June than in January.

What Limited Company Directors Need To Do Now

Directors of limited companies sit in a slightly specific position here, and it’s worth being clear about it.

If you use your own car for business journeys: visiting clients, attending meetings, travelling to temporary workplaces, your company can reimburse you at the approved mileage rate, free of tax and National Insurance. That reimbursement is a deductible business expense for the company, reducing the profit subject to Corporation Tax.

It is not salary. It is not a dividend. It is not a director’s loan. It is a mileage reimbursement, and as long as the journeys qualify and you keep proper records, it should sit squarely in the expenses column.

Right now, you should be checking:

• How many business miles you’ve recorded since 6 April 2026
• Whether those claims were processed at 45p or 55p
• Whether you’re still within the first-tier 10,000-mile threshold
• Whether your bookkeeping system reflects the new rate going forward
• Whether a backdated top-up reimbursement needs to be processed

For the broader picture of how mileage reimbursements fit alongside salary, dividends, and pension contributions, our guide on how to pay yourself from a limited company covers the full range of options.

What Actually Counts As Business Mileage?

More than the rate itself, this is where people come unstuck.

Business mileage means travel that is genuinely necessary for business purposes: visiting a client, going to a supplier, attending a meeting away from your normal workplace, travelling between temporary work locations. The question HMRC asks is whether the journey was required by the business, not whether you happened to think about work on the way.

Ordinary commuting (the drive from home to your normal place of work) does not qualify. It doesn’t qualify because the journey is long. It doesn’t qualify because the roads are bad. It doesn’t qualify because you use your own car. It’s commuting, and HMRC has been consistent about this since well before most of us were filing tax returns.

For example: an IT consultant who lives in Dudley and commutes to an office in London every day is still commuting, regardless of the distance or the cost of the journey. The length of the trip does not change what it is.

Compare that to an insurance broker who drives from home to their Birmingham office each morning, then heads out to see clients across the region. The morning drive to the office is ordinary commuting. The client visits from the office are qualifying business journeys. Same person, same day, two completely different tax treatments.

A proper mileage log needs:

• The date
• Start point and destination
• The business reason — specifically (“client meeting — Jones Engineering Ltd, Birmingham” rather than “meeting”)
• Number of miles
• Vehicle used
• Amount claimed

SCCS tax clinic note: Vague mileage logs are one of the most common issues we see. “Business travel — 340 miles” as a monthly total is not a mileage record. It’s a number with no supporting story. HMRC expects enough detail to understand what each journey was and why it was necessary. If you couldn’t reconstruct the purpose of a journey six months later from your log, the log isn’t good enough.

Temporary Workplaces, Permanent Workplaces, And Why The Difference Matters

Whether a mileage claim holds up often comes down to this distinction, and it catches more people out than almost anything else in this area of tax.

A temporary workplace is somewhere you attend for a limited period or a specific purpose. A permanent workplace is somewhere you attend regularly as part of your ongoing role. Travel from home to a temporary workplace can qualify as business mileage. Travel from home to a permanent workplace is commuting, and commuting is not claimable.

It sounds straightforward until you look at real situations. A Birmingham-based employee sent to cover a colleague in Manchester for six months can claim the travel. Someone hired on a six-month fixed-term contract at that same Manchester office cannot, because it represents the whole of their employment. Same journey, same duration, completely different tax treatment. HMRC does not look at the distance or the length of the contract. It looks at the facts.

Area-based roles add another layer. A sales manager whose job involves visiting clients across the West Midlands every day may find that the entire region is treated as her permanent workplace, with the drive from home to the patch boundary classed as ordinary commuting. Grey territory is very much a thing here.

If your working pattern involves multiple locations, fixed-term postings or regular visits to the same client site, it is worth getting a proper view rather than assuming everything qualifies. The cost of getting it wrong tends to be higher than the cost of asking the question, and this applies to more roles than people realise. Think construction contractors, building site managers, sales agents, milkmen, delivery drivers, field engineers, care workers and anyone else who has ever eaten a meal deal in a layby and called it a lunch break.

Get in touch with SCCS Accountants and we will work through your specific situation with you.

What If Your Company Pays Less Than 55p Per Mile?

Some businesses set their internal mileage rate below the HMRC approved amount, perhaps because the policy hasn’t been reviewed recently, or as a deliberate business decision.

If you receive less than the approved rate, you may be able to claim mileage allowance relief on the shortfall. This is a tax relief on the gap between what you were paid and what HMRC would allow.

For example:

• Approved rate: 800 miles × 55p = £440
• Amount reimbursed: 800 miles × 40p = £320
• Shortfall eligible for relief: £120

The relief is applied at your marginal tax rate. HMRC doesn’t send a cheque for the full £120. But for a higher rate taxpayer, relief on £120 is worth £48. Over a year of regular business travel, consistently claiming this relief adds up to something worth having.

Employees not in Self Assessment can usually claim employment expense relief directly with HMRC. If you file a Self Assessment return, the claim goes on there.

This is one of the most consistently unclaimed reliefs we come across in practice, largely because nobody knows it exists until an accountant mentions it.

If you think you might be sitting on an unclaimed shortfall, get in contact and we will take a look.

What If Your Company Pays More Than 55p Per Mile?

Then the excess may be taxable.

If a company reimburses a director at 65p per mile when the approved rate is 55p, the extra 10p per mile above the approved amount isn’t automatically tax-free. It may need to be reported, and it may attract Income Tax and National Insurance.

This doesn’t mean companies can never pay above the rate, it means the excess needs to be handled correctly.

For the vast majority of small limited companies, the cleanest approach is to stick to the HMRC approved rates. There’s rarely a compelling reason to go above them, and the compliance overhead of doing so generally isn’t worth it.

What About Company Cars And Fuel Cards?

The 55p AMAP rate applies where you use your own car for business travel. It doesn’t apply to company cars, and it’s important not to conflate the two.

If the company owns or leases the vehicle, or if you have a company car benefit, the tax treatment is entirely different based on the car’s list price, CO2 emissions, and fuel type rather than a per-mile reimbursement.

Fuel cards add a further layer of complexity. If your company provides a fuel card used for both business and private fuel, the tax treatment depends on who owns the vehicle, how the card is reconciled, and whether private use is being separately accounted for.

SCCS tax clinic note: We work with businesses that run a mix of personal vehicles, company cars, vans, and fuel cards — sometimes all at once. The new 55p rate doesn’t apply uniformly across every journey in every vehicle. If your business has more than one type of vehicle arrangement, the right thing to do is review each one separately. Assuming the new rate applies everywhere is a fast route to either underclaiming or creating an unexpected taxable benefit.

The advisory fuel rates for company cars are a separate set of figures, updated quarterly by HMRC, and are not the same thing as the AMAP rates.

What About The Self-Employed?

The rate change also affects self-employed individuals using simplified mileage expenses rather than claiming actual vehicle costs.

If you’re self-employed and have been recording business mileage since 6 April 2026 at 45p, those records need updating.

Common Mistakes To Avoid

The rate change is simple enough that it’s easy to assume everything is fine. Here are the things that catch people out.

Not backdating to 6 April. The new rate applies from the start of the 2026/27 tax year, not from whenever you heard about it. If your records still show 45p for journeys after 6 April, you’re underclaiming.

Treating commuting as business travel. This is the big one, and it predates the rate change by decades. Home to your regular office is not a business journey. Adding a brief stop on the way doesn’t change that.

Keeping a mileage log that wouldn’t survive a question. A monthly total with no dates or destinations is not evidence. HMRC expects detail. If you can’t explain a journey from your records alone, the records aren’t sufficient.

Mixing up personal car mileage with company car fuel. These are governed by completely different rules. Don’t put them in the same box.

Writing off the 10p-per-mile difference as trivial. For a director doing 8,000 business miles a year, the difference between the old rate and the new one is £800. That’s not trivial.

SCCS tax clinic note: One pattern we see regularly: a director who does a regular client run — same client, same route, every week — and records it faithfully as business mileage. That’s often fine. But if that same client has been visited every week for three years and the visits constitute a significant part of the director’s role, HMRC may eventually argue that location has become a permanent workplace. If you have a regular client relationship involving frequent travel, it’s worth checking whether the temporary workplace rules still apply.

Should You Update Your Expense Policy?

If your company has directors or employees who claim mileage, yes.

Your expense policy should now confirm:

• The 55p rate applies from 6 April 2026 for cars and vans
• The 55p rate covers the first 10,000 business miles per tax year only
• The 25p rate applies above 10,000 business miles
• Motorcycle and bicycle rates are unchanged
• Mileage claims require supporting records: dates, destinations, business purposes
• Company cars and fuel cards are subject to separate treatment
• Ordinary commuting is not claimable

While you’re there, check whatever system you use to process mileage claims: Xero, QuickBooks, FreeAgent, or a manual spreadsheet. If the old 45p figure is still in there, every claim being processed is wrong. This is exactly the sort of thing that’s easy to miss because nobody thinks to check the number that’s always just been there.

When To Speak To An Accountant

A mileage rate change sounds administrative. And in some businesses, it is: update the rate, review the records, process a top-up, move on.

But it touches more than it appears to: director expenses, Corporation Tax deductions, possible Self Assessment adjustments and the temporary vs permanent workplace analysis if your situation is less than straightforward.

When people look for how to find a good accountant, the conversation usually starts with small business accountant fees. And fees do matter. But what you’re really looking for is someone who flags changes like this to you before the tax year is half over, not someone you have to ask.

If you’re unsure whether your mileage position is clean, whether the backdated adjustment has been handled correctly, or whether your vehicle arrangements are being treated appropriately, speak to us. We’ll review where things stand and tell you what, if anything, needs fixing, in plain English, without the jargon.

We also have a full guide on reclaiming business mileage expenses. Ask us and we’ll send it over.

Your Action Checklist

• Pull your mileage records from 6 April 2026 and check whether they’re at 45p or 55p
• Calculate any backdated shortfall and arrange a top-up reimbursement where needed
• Update your bookkeeping software, expense app, or mileage spreadsheet to the new 55p rate
• Update your business expense policy to reflect the change from 6 April 2026
• Make sure your mileage log records dates, destinations, and business purposes, not just totals
• Check that ordinary commuting hasn’t been included in business mileage claims
• If your business uses company cars or fuel cards, review those separately
• If your accounting year doesn’t align with the tax year, make sure mileage is split correctly across periods
• Speak to SCCS Accountants if any of the above raises questions you’d rather not guess at

FAQs On Approved Mileage Allowance Payments

What is the new HMRC mileage rate for 2026/27?

From 6 April 2026, the approved mileage allowance payment rate for cars and vans is 55p per mile for the first 10,000 business miles in a tax year. Above 10,000 miles, the rate is 25p. Motorcycle and bicycle rates are unchanged at 24p and 20p respectively.

Does the new business mileage allowance apply to company cars?

No. The approved mileage allowance payment rate applies where an employee or director uses their own car or van for business travel. Company cars are subject to Benefit in Kind rules, not AMAP rates. The two are separate.

The rate changed on 6 April — can I claim the difference for mileage I’ve already recorded at 45p?

Yes. The new rate applies from the start of the 2026/27 tax year. If you’ve recorded qualifying business miles since 6 April at the old rate, you may be entitled to a top-up provided the journeys qualify and your records support the claim.

My company pays me 35p per mile. Am I missing out?

Potentially, yes. Where an employer pays below the HMRC approved rate, the individual may be able to claim mileage allowance relief on the shortfall, either through Self Assessment or directly with HMRC. The relief is worth claiming. Speak to an accountant if you’re unsure how.

What do I actually need to keep in a mileage log?

The date, start point, destination, business reason for the journey, number of miles, and amount claimed. Specific and clear beats vague every time. “Client visit — Thornton & Co, Birmingham, 18 miles” is the right kind of entry.

Is driving from home to my office business mileage?

No. Travel from home to your normal workplace is ordinary commuting. It’s not claimable regardless of distance, vehicle type, or how often you do it. Business mileage starts when you travel for a genuine business purpose beyond your regular workplace.

How do I find a good accountant who keeps on top of things like this?

Look for one who tells you about changes like a mileage rate increase before you’ve spent three months underclaiming. That’s a reasonable minimum expectation. If you’d like to talk to SCCS Accountants, we’re happy to review your position and explain your options without the fog of jargon.

Disclaimer

This article is for general information only and does not constitute tax, accounting or financial advice. Tax rules can change and the correct treatment depends on your circumstances. Always seek tailored advice before making decisions or changing how your business processes expenses.

SCCS Accountants Ltd