If you or your employees use a personal vehicle for business journeys, it is important to understand what can be claimed tax-free and how mileage should be reimbursed correctly.
HMRC has updated the Approved Mileage Allowance Payments (AMAPs) for the 2026/27 tax year, with the biggest change being an increase to the main mileage rate for cars and vans.
For many business owners, directors, and employees regularly travelling for work, this could make a meaningful difference over the course of the year.
Key Takeaways
- HMRC mileage rates have increased from 45p to 55p per mile for the first 10,000 business miles
- The change applies from 6 April 2026
- Electric cars can also claim the full 55p rate if personally owned
- Normal commuting does not qualify as business mileage
- Good mileage records are essential to support claims
- Directors can also claim mileage from their company where the vehicle is personally owned
Source: HMRC Mileage Rates and Allowances
What Has Changed?
The main HMRC mileage rate for cars and vans has increased from 45p to 55p per mile for the first 10,000 business miles.
This is the first increase to the approved mileage rates in many years and reflects the significant rise in motoring costs including fuel, insurance, servicing, and vehicle running costs.
Comparison of Old vs New Rates
| Vehicle Type | 2025/26 Rates | 2026/27 Rates | Change |
|---|---|---|---|
| Cars & Vans (first 10,000 business miles) | 45p | 55p | +10p |
| Cars & Vans (over 10,000 business miles) | 25p | 25p | No change |
| Motorcycles | 24p | 24p | No change |
| Bicycles | 20p | 20p | No change |
| Passenger payments | 5p | 5p | No change |
Current HMRC Mileage Rates for 2026/27
Cars and Vans
| Business Miles | HMRC Rate |
|---|---|
| First 10,000 business miles | 55p per mile |
| Over 10,000 business miles | 25p per mile |
Motorcycles and Bicycles
| Vehicle Type | HMRC Rate |
|---|---|
| Motorcycles | 24p per mile |
| Bicycles | 20p per mile |
These rates apply where an employee or director uses their own personally owned vehicle for business journeys.
What Does the Increase Actually Mean?
If you drive 8,000 business miles per year, the increase from 45p to 55p means:
- Previous claim at 45p: £3,600
- New claim at 55p: £4,400
- Additional tax-free reimbursement: £800
For businesses and directors regularly travelling to clients, networking events, temporary workplaces, or meetings, this can quickly add up.
Can Directors Claim Mileage?
Yes.
Directors can claim HMRC mileage allowances in exactly the same way as employees, provided they are using a personally owned vehicle for business travel.
The company can reimburse the mileage tax-free, and the business will generally receive corporation tax relief on the cost.
This is often a simple and tax-efficient way for directors to extract funds from the company where business travel is involved.
HMRC Mileage Rates for Electric Cars
A common misconception is that electric cars have a lower mileage claim rate.
If you use your own electric car for business journeys, you can still claim the full HMRC approved mileage rate of:
- 55p per mile for the first 10,000 business miles
- 25p per mile thereafter
The mileage allowance is designed to cover all vehicle running costs, including:
- Electricity/fuel
- Insurance
- Repairs and servicing
- Tyres
- Depreciation
You cannot separately claim electricity costs on top of the mileage claim when using the approved mileage method.
Passenger Payments
Employers can also reimburse an additional:
- 5p per passenger per business mile
This applies where employees carry fellow employees during the same business journey.
What Counts as Business Mileage?
Business mileage generally includes journeys such as:
- Travelling to clients
- Visiting suppliers
- Travelling between work locations
- Travelling to temporary workplaces
- Attending networking events or business meetings
Ordinary commuting between home and your permanent workplace does not qualify as business mileage.
Common Mileage Claim Mistakes
Some of the most common issues we see include:
- Claiming ordinary commuting as business mileage
- Claiming fuel or electricity separately as well as mileage
- Not keeping proper mileage records
- Claiming personal journeys as business travel
- Forgetting that electric cars can still claim the full mileage rate
- Claiming mileage for journeys that are not wholly and exclusively for business purposes
What Mileage Records Do You Need to Keep?
To support mileage claims, we recommend keeping:
- Date of journey
- Start and end location
- Purpose of the journey
- Number of business miles travelled
Mileage logs can be maintained using spreadsheets or mileage tracking apps and should be retained alongside your accounting records.
What Should You Do Now?
We recommend that businesses:
- Update internal mileage policies and reimbursement rates
- Ensure bookkeeping or payroll teams are aware of the changes
- Keep clear and accurate mileage logs
- Review whether mileage claims are being treated correctly
- Ensure directors and employees understand what qualifies as business mileage
Final Thoughts
Small changes like this can easily get missed, but they can make a meaningful difference over the course of a year, particularly for businesses and directors regularly travelling for work.
If you are unsure what you can claim, or want help making sure everything is being treated correctly and tax efficiently, our team would be happy to help.