UK Autumn Budget 2026: What It Means for Expense Management

In brief: The UK Autumn Budget has several changes for expense teams. The 55p tax-free mileage rate is now permanent, and the rate above 10,000 business miles rises from 25p to 35p from 6 April 2027. From 6 April 2028, HM Revenue & Customs’ (HMRC’s) benchmark subsistence rates rise to £20, £60, and £75, and the 200+ overseas rates are replaced with a tiered system. Mandatory e-invoicing for value added tax (VAT) follows from April 2029.

Chancellor John Healey’s first UK Autumn Budget made no changes to the main rates of income tax, National Insurance (NI), or VAT. For finance teams, the changes that matter are in the detail: mileage, subsistence, and how VAT invoices are issued.

In our 2026 Expense Trends report, we found that mileage is the most commonly submitted expense category across businesses, so any change to mileage rates reaches more claims than any other. The subsistence reforms are further out, but they replace benchmark rates of £5 and £10 that haven’t risen since 2009.

UK Autumn Budget 2026: changes at a glance

Some of these measures still need secondary legislation or a future Finance Bill, so dates and figures can change before they take effect. (Source: Budget 2026 overview of tax legislation and rates)

Mileage rates: 55p stays, and 35p above 10,000 miles

The Approved Mileage Allowance Payment (AMAP) rate of 55p for the first 10,000 business miles in a car or van is now permanent following May’s increase. The budget announcement made further changes; from 6 April 2027, the rate above 10,000 miles will now also rise from 25p to 35p. This is the first change to the higher rate since AMAPs were introduced in 2002.

The same rates apply to self-employed simplified mileage, and the National Insurance disregard moves with them. So any mileage payment up to the new limits stays free of both tax and NI.

Here’s what the maximum tax-free payment looks like for three example drivers:

The gain only applies to miles above 10,000, so it’s concentrated in high-mileage roles such as field sales, engineers, and care workers. An organisation whose drivers rarely pass 10,000 business miles won’t see any change in cost.

These are maximum tax-free rates, not a legal requirement. If you pay less, employees can claim tax relief on the difference. If you pay more, the excess is taxable through payroll.

What finance teams should do:

• Update your expense policy: add the 35p rate for miles above 10,000, effective from 6 April 2027.
• Check your rate settings: make sure your expense system switches each driver to 35p at the right point, not just the 25p rate it uses today.
• Track cumulative mileage per driver: the higher rate depends on each employee’s running total for the tax year, so it needs accurate, per-journey records.

Subsistence: new benchmark and overseas rates from 2028

HMRC’s benchmark scale rates (the maximum you can pay tax-free for meals on business travel without checking each receipt) are being reset. From 6 April 2028, they rise to £20, £60, and £75.

The 200+ destination-specific overseas scale rates are also being replaced by a simpler tiered system linked to the new benchmark rates. HMRC hasn’t published the destination-level figures yet.

The 5-hour rate quadruples and the 10-hour rate rises sixfold—but none of it applies until secondary legislation and HMRC guidance are in place. Until 6 April 2028, the current rates stay.

Fuel and electric vehicles

• Fuel duty: the 5p a litre cut is extended to 30 June 2027. From 1 July 2027, rates return to their pre-2022 level and rise with inflation, so expect fuel costs (and advisory fuel rates) to move after that.
• Public EV charging: from 1 November 2026, the law confirms that electricity from publicly accessible charge points is standard-rated (20%) for VAT. That matters for VAT reclaims on charging receipts.
• Home charging: the temporary 0% VAT rate on domestic electricity is extended to 30 June 2027.
• eVED: a pay-per-mile charge of 3p for electric cars and 1.5p for plug-in hybrids starts on 1 April 2028. It’s a cost for vehicle owners, not a change to mileage rates.

Employee expense claims and e-invoicing

From April 2028, the £2,500 Self Assessment threshold for employment expenses is removed. Employees with larger unreimbursed expenses will be able to claim tax relief through PAYE instead of filing a tax return.

E-invoicing is the bigger long-term change. From April 2029, HMRC can require VAT invoices to be issued and received in a set electronic format. A consultation on the detail runs until 20 January 2027.

If your team still processes supplier invoices as PDFs or paper, the 2029 date gives you time to plan—but not much room to leave it late.

What finance teams should do now

• Update your mileage policy for the 35p rate above 10,000 miles from 6 April 2027.
• Check your expense system applies the 55p and 35p rates by each driver’s cumulative mileage.
• Review your subsistence policy ahead of the new benchmark and overseas rates in April 2028.
• Check VAT on EV charging receipts so public charging is reclaimed at the standard rate.
• Start planning for e-invoicing and respond to the consultation by 20 January 2027 if it affects you.

Make the UK Autumn Budget changes work for you

A permanent 55p rate and a higher 35p rate for longer journeys are good news for employees who drive for work. For employers, they’re a prompt to check how mileage and subsistence claims are handled from start to finish, before April 2027 arrives.

The fix isn’t complicated. Update your expense policy, make sure your system switches drivers to the right rate at 10,000 miles, tell your teams what’s changing, and put the April 2028 subsistence changes in the diary now.

If you’d like to see how Capture Expense automatically handles mileage tracking, rate management, and compliance, book a demo or take the self-paced product tour.

Frequently asked questions

What did the UK Autumn Budget 2026 change for business expenses?

The 55p mileage rate for the first 10,000 business miles is now permanent, and the rate above 10,000 miles rises from 25p to 35p from 6 April 2027. New benchmark subsistence rates and a tiered system for overseas rates follow from 6 April 2028, and mandatory e-invoicing for VAT from April 2029.

What are the HMRC mileage rates from April 2027?

The 55p rate for the first 10,000 business miles in a car or van is now permanent. From 6 April 2027, the rate for miles above 10,000 rises from 25p to 35p.

Do the new mileage rates apply to the self-employed?

Yes. The same rates apply to simplified mileage rates for self-employed people and partnerships.

What are the new HMRC benchmark subsistence rates?

From 6 April 2028, the benchmark scale rates will be £20 for travel over 5 hours, £60 for over 10 hours, and £75 for over 24 hours. They still need secondary legislation, so the current rates apply until then.

What’s happening to overseas scale rates?

From 6 April 2028, the 200+ destination-specific overseas scale rates will be replaced by a tiered system linked to the new benchmark rates. HMRC is still working on the destination-level figures.

When does mandatory e-invoicing start in the UK?

From April 2029, HMRC can require VAT invoices to be issued and received in a set electronic format. A consultation runs until 20 January 2027.

Sources

• Budget 2026: overview of tax legislation and rates (GOV.UK)
• Increasing mileage rates (GOV.UK)
• Permanent increase to tax-free mileage rates (CIPP)
• HMRC mileage rise exposes outdated expense processes (IT Brief UK)