If you pay employees for business miles driven in their own vehicles, a big change has just come into force—and it affects every mileage claim from April 2026 onwards.
For the first time since 2011, HMRC has increased the Approved Mileage Allowance Payment (AMAP) rate. Cars and vans now attract a rate of 55p per mile for the first 10,000 business miles in a tax year, up from 45p. That’s a 22% increase, and it marks the end of a 15-year freeze that left many employees significantly out of pocket as fuel costs rose around them.
This is genuinely good news for people who use their own vehicles for work. But for employers, it also means that expense policies need updating, payroll processes may need reviewing, and mileage calculations that have run on autopilot for years now need reconfiguring.
Here’s everything you need to know about the HMRC mileage rate increase!
What’s changed, and when did it take effect?
The new AMAP rates from April 2026
The change applies from 6 April 2026 (the start of the 2026–27 tax year) and has been backdated to that date. HMRC has published the updated rates officially on GOV.UK and they are:
| Vehicle type | First 10,000 business miles | Each mile over 10,000 |
| Cars and vans | 55p (was 45p) | 25p (unchanged) |
| Motorcycles | 24p (unchanged) | 24p (unchanged) |
| Bicycles | 20p (unchanged) | 20p (unchanged) |
The rate above 10,000 miles—25p per mile for cars and vans—remains the same. Motorcycle and bicycle rates haven’t changed either. So, this update is squarely focused on car and van users for the portion of miles below the 10,000-mile threshold.
It’s also worth noting that the passenger payment rate (5p per passenger per business mile) hasn’t been updated, so it remains unchanged.
Why now, after 15 years?
The 45p rate was set back in 2011. Since then, fuel costs, vehicle running costs, and inflation have all increased considerably—leaving employees who use their own cars for work effectively subsidising the cost themselves. Many employers have responded by paying above the AMAP rate (which is fine, though the excess becomes taxable), but plenty of others have simply paid the HMRC rate without reviewing whether it was still fair.
The increase to 55p brings the rate more in line with real-world running costs, reflecting ongoing pressure from business groups and payroll professionals who’ve been calling for a review for several years.
What does the HMRC mileage rate increase mean for your organisation?
Updating your expense policy
If your business reimburses employees at the AMAP rate—or references HMRC’s approved rate in your expense policy—you’ll need to update your documentation to reflect the new 55p figure. This applies whether you’re running a small team or managing mileage claims across hundreds of employees.
A few questions worth asking right now:
- Does your current expense policy reference a specific mileage rate? If so, it needs updating.
- Do you pay above or below the HMRC rate? If you pay below, you may now be under-reimbursing employees (which is a tax issue—more on that below).
- Do your employees know the rate has changed? Clear communication is especially important for people who submit regular mileage claims.
Tax and National Insurance implications
The AMAP rate is the maximum you can pay employees for business mileage in their own vehicles without triggering a tax liability. As long as you pay at or below that rate, neither the employer nor the employee has a tax or National Insurance (NI) liability on those payments.
Pay above it, and the excess is subject to tax and NI. Pay below it, and employees can claim Mileage Allowance Relief (MAR) for the difference via their Self Assessment return—but that’s an admin burden you can avoid by simply reimbursing at the correct rate.
Now that the rate has moved to 55p, any reimbursements you’ve been making since 6 April 2026 at the old 45p rate are technically under-reimbursements. Employees have been driving at a loss. You’ll want to review whether any back-payments are needed.
Make the HMRC mileage rate increase work for you
The increase to 55p is long overdue, and it’s a positive change for employees who’ve been bearing the rising cost of vehicles. For employers, it’s a prompt—not just to update a figure in a spreadsheet, but to take a proper look at how mileage claims are managed end to end.
The good news is that getting this right doesn’t have to be complicated. Update your policy, check for any backdated claims since April, communicate the change to your team, and make sure your systems reflect the new rate. It’s as simple as that.
If you’d like to see how Capture Expense automatically handles mileage tracking, rate management, and compliance, book a demo with a member of our team or take a product tour at your own pace!
Find out more about Capture Expense
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