HMRC Travel and Expense Rules for UK Employers (2026-27)

In brief: HMRC doesn’t certify expense software. It checks what your process can prove: the right rate for the journey date, a receipt for every claim, and records you can still produce years later. For 2026-27, car and van mileage is 55p for the first 10,000 business miles and 25p above that, rising to 35p from 6 April 2027, while journeys made before 6 April 2026 are still paid at 45p. Benchmark subsistence rates are £5, £10, and £25, rising to £20, £60, and £75 from 6 April 2028, when overseas country rates also move to a tiered system. Anything paid above HMRC’s rates is taxable and reportable, and you’ll need to keep company and VAT records for at least 6 years and PAYE and expenses records for 3.

HMRC doesn’t certify expense software. What it looks at is what your process can prove: the right rates for the date of the journey, a receipt against every claim, an audit trail nobody can quietly edit, VAT evidence that holds up, and records you can still produce years later.

That’s what HMRC travel expenses guidelines come down to in practice.

These HMRC travel and expenses guidelines are for the person signing off the expense run, not just filling one in. Below, you’ll find what you can reimburse tax free, what you have to report, what you have to keep, and the two areas where the rules changed recently enough that a lot of processes haven’t caught up.

What counts as business travel

A journey counts as business travel if the employee travels in the performance of their duties, or to a place they must attend for their role that isn’t their permanent workplace.

Ordinary commuting never counts in this. Home to a permanent workplace isn’t reimbursable tax free, however early the start or long the drive. Pay it anyway, and it becomes earnings, taxed through payroll.

A temporary workplace becomes permanent once the employee has attended, or expects to attend, for more than 24 months and spends 40% or more of their working time there. Both these tests need to be met; if you miss one, the workplace will stay temporary.

Here’s the part a lot of organisations don’t realise—it’s the expectation that matters, not just the elapsed time. Take a contractor told in month nine that the placement will run three years. They lose relief from month nine, not month 24.

Mileage: what do you pay and on what basis?

Here are the Approved Mileage Allowance Payments (AMAP) rates for 2026-27:

Vehicle	First 10,000 business miles	Over 10,000 miles
Cars and vans	55p	25p (35p from 6 April 2027)
Motorcycles	24p	24p
Bicycles	20p	20p
Passenger supplement	5p per passenger per business mile

If you pay at or below those rates, nothing is reportable. Pay above them, however, and the excess is taxable for the employee. Anything above 55p a mile is also subject to Class 1 National Insurance through payroll. And, if you were to pay below them, the employee can claim Mileage Allowance Relief on the shortfall.

Good news: the rules themselves are simple once you know them. The bit that trips people up is the passenger supplement—5p per passenger per mile, payable only where the passenger is on their own work journey too. It’s easy to miss, and it’s usually the first thing an audit picks up on.

Why you need two mileage rates this year

The car and van rate rose from 45p to 55p on 6 April 2026. It had sat at 45p since the 2011-12 tax year—fifteen consecutive years—so a 10p rise is a 22% increase against a base almost nobody had needed to touch for over a decade.

That means the split-year problem is live right now. The rate applies by the date of the journey, not the date of the claim. A claim submitted in June 2026 for a journey made in March 2026 has to be paid at 45p. A system with one global rate field pays it at 55p, silently, and that 10p becomes a payment above the approved amount: taxable on the employee, reportable, and subject to Class 1 National Insurance.

Late claims, rejected claims resubmitted, and anyone catching up a quarter of driving in one go all land in this trap. Any system you rely on needs a rate table versioned by effective date, not a single figure someone remembers to update.

And there’s another change coming. The Autumn Budget 2026 made the 55p rate permanent and raised the rate above 10,000 miles from 25p to 35p from 6 April 2027. So from next April, high-mileage claims will need a third rate, applied by journey date in the same way.

The size of the change matters too. Forty field engineers averaging 12,000 business miles each moves the approved amount from £200,000 to £240,000 a year, and to £248,000 from April 2027 once the 35p rate applies. That’s a budget line rather than a payroll detail, and it arrived without a rate card change on your side.

One thing that hasn’t changed is VAT. Input tax on the fuel element of a mileage payment is still driven by the advisory fuel rates rather than the AMAP rate, so a higher AMAP recovers you nothing extra.

Worth knowing if you’re checking your sums: the worked example on the GOV.UK business travel mileage page still uses the pre-April 2026 rate, giving £5,000 for 12,000 miles, while the rate stated at the top of the same page is correctly 55p. At current rates, the approved amount for 12,000 miles is £6,000.

Meals and subsistence

HMRC’s subsistence rules are less about what you choose to reimburse and more about whether the payment matches a qualifying journey and genuine meal cost.

Here are the HMRC benchmark scale rates for 2026-27:

Minimum journey time	Maximum meal allowance
5 hours	£5
10 hours	£10
15 hours, and ongoing at 8pm	£25

From 6 April 2028, these rates rise to £20 (more than 5 hours), £60 (more than 10 hours), and £75 (more than 24 hours), following the Autumn Budget 2026. The change still needs secondary legislation, so the current rates apply until then.

Two things decide whether the exemption holds. Benchmark rates haven’t needed a checking system since 6 April 2019. Bespoke rates, agreed with HMRC in advance, still do.

The knowledge and suspicion test applies either way: pay a rate you know or suspect isn’t matched by actual spend, and the exemption falls away.

Outside the UK, use the published country rates, taking the closest listed city where the country itself isn’t listed. From 6 April 2028, the 200+ country rates will be replaced by a simpler tiered system.

Accommodation and when a reimbursement becomes reportable

Accommodation on a qualifying journey is reimbursable at reasonable actual cost, receipted. Hotel VAT is only recoverable against a valid invoice, and above £250 that means a full VAT invoice rather than the folio summary emailed at checkout.

Reimbursing a qualifying expense is exempt, so it doesn’t reach a P11D (the form used to report expenses and benefits) at all. What does reach one is everything outside the exemption: mileage above the approved amount, subsistence above the benchmark or bespoke rate, personal spend on a company card, and anything paid with no qualifying journey behind it.

P11D and P11D(b) are due by 6 July, with Class 1A NICs due by 22 July at 15%. A PAYE Settlement Agreement can absorb minor and irregular items instead, and payrolling benefits in kind removes most of the P11D exercise. It becomes mandatory in two phases: taxable expenses, cars, vans, fuel, and medical benefits from 6 April 2027, and most other benefits from 6 April 2028.

The two routes aren’t interchangeable. Reimburse, and the employee is made whole while you carry the compliance obligation. Don’t, and the employee claims tax relief themselves, recovering only tax at their marginal rate—20p in the pound on a mileage shortfall for a basic rate taxpayer. That gap is exactly why underpaying mileage tends to produce complaints rather than savings. From April 2028, the £2,500 Self Assessment threshold for these claims is removed, so more employees will be able to claim through PAYE instead of filing a tax return.

Self-employed contractors sit outside all of this, deducting their own costs from trading profit.

VAT recovery on employee expenses

This is where most expense processes fall down, because the money is real and the paperwork is thin:

• Input tax on a mileage allowance is the fuel element times the VAT fraction, based on mileage actually done.

• Per employee, you need to hold five things: mileage travelled, whether it was business or private, the vehicle’s cylinder capacity, the rate of mileage allowance, and the input tax claimed. Miss one, and the claim is unsupported.

• Keep fuel invoices covering at least the VAT you reclaim, unless the fuel was bought on a company fuel, credit or debit card.

• Above £250 including VAT, you need a full VAT invoice—a simplified or retailer’s invoice is only good up to £250.

One to watch: VAT on business entertainment of non-employees is blocked. Code it separately from staff entertaining, or it gets reclaimed by accident and shows up in a VAT inspection.

Evidence, receipts and retention

HMRC accepts digital copies, so scanning and binning the paper is fine—as long as the image is legible and kept for the full period. It will ask for proof, and it often asks years later, which is the part that catches people out.

Here’s the thing: capturing a receipt at the point of spend is a compliance argument, not just a convenience one. A receipt photographed at the till is legible, dated and attached to the right claim. The same receipt found in a jacket at month end is faded, partial or gone—and what replaces it is a guess.

Record type	Keep for	Penalty for failure
Company and accounting records	6 years from the end of the accounting period	Up to £3,000, or director disqualification
VAT records	At least 6 years	Input tax assessed back
PAYE and expenses records	3 years from the end of the tax year	Up to £3,000

The test that matters isn’t whether you have a retention policy on paper. It’s whether you can produce a named receipt image from four years ago within a working day.

Staff entertaining and trivial benefits

The annual function exemption is £150 per head per tax year, and it’s an exemption rather than an allowance—a penny over, and the whole cost becomes taxable, not just the excess.

Trivial benefits are exempt at £50 or less each, with a £300 annual cap for close company directors. Neither can be cash, a cash voucher, or a reward for work done — so keep that distinction clear in your policy.

The UK employer expense rule reference set

Here are twenty-four testable requirements you can check against these HMRC travel expenses guidelines:

#	The test	Cost of failing
1	Car and van mileage paid at 55p to 10,000 miles, 25p above, for journeys on or after 6 April 2026 (35p above 10,000 miles from 6 April 2027)	Under or overpayment
2	Journeys before 6 April 2026 paid at 45p	Excess above approved amount
3	Motorcycles 24p and bicycles 20p at all mileages	Taxable excess
4	Passenger supplement 5p per passenger per mile, only where the passenger is on their own work journey	Car sharing stops
5	Payments above the approved amount reported and taxed	P11D correction, Class 1 National Insurance
6	Employees paid below the approved amount told they can claim Mileage Allowance Relief	Back claims
7	Benchmark subsistence capped at £5, £10 and £25 (£20, £60, and £75 from 6 April 2028)	Taxable payment, exemption lost
8	The old £5, £5, £10, £15 four-rate table is not in use	Underpayment
9	Where a journey runs beyond 8pm, the £25 rate applies correctly	Underpayment
10	Bespoke scale rates operate a documented checking system; benchmark rates need not	Exemption lost
11	Bespoke scale rates agreed with HMRC before use	Payments taxable in full
12	Overseas subsistence uses published country rates, or the closest listed city (a tiered system from 6 April 2028)	Taxable excess
13	A workplace passing both the 24 month and 40% tests is treated as permanent	Years of relief withdrawn
14	Ordinary commuting is not reimbursed tax free	Earnings, PAYE and NIC due
15	Company records kept 6 years from the end of the financial year	Up to £3,000
16	PAYE and expenses records kept 3 years from the end of the tax year	Up to £3,000
17	VAT records kept at least 6 years	Input tax assessed back
18	Input tax on mileage is the fuel element times the VAT fraction, on mileage actually done	Assessed back with interest
19	Per employee: mileage travelled, business or private, cylinder capacity, rate paid, input tax claimed	Mileage VAT unsupported
20	Fuel invoices retained covering at least the VAT reclaimed, unless bought on a company card	Input tax disallowed
21	Full VAT invoice held above £250; simplified invoices only to £250	Input tax disallowed
22	Trivial benefits £50 or less each, £300 annual cap for close company directors	Whole benefit taxable
23	Annual function exemption applied at £150 per head as an exemption, not an allowance	Entire event taxable
24	P11D and P11D(b) filed by 6 July, Class 1A paid by 22 July at 15%	Late filing and payment penalties

Apply the same style of test to any system on your shortlist, whoever built it: a rate table versioned by effective date, the receipt image retained for the full retention period rather than just the claim lifetime, an immutable audit trail after approval, enforced separation of claimant and approver, duplicate detection across claim lines, card feeds and mileage, UK data residency, Cyber Essentials Plus, and a listing on the Crown Commercial Service G-Cloud Digital Marketplace.

HMRC travel expenses guidelines covered with Capture Expense

Every rule in this guide comes back to what your process can prove. This table maps the mileage, subsistence, trip, and overseas rules to what Capture Expense does.

Guide section	What Capture Expense does
Mileage	Holds company and private vehicles, with HMRC-approved rates for employees’ own cars and custom rates you set by fuel type and engine size. Bands each mile on the driver’s cumulative tax-year total, so the rate steps down at 10,000 miles automatically. Calculates distance from start and end postcodes and records the vehicle and any passengers. Rate records carry an effective-from date, so a rate change takes effect from the correct day.
Meals and subsistence	Sets UK and overseas rate bands by journey hours. Departure and return times set the band for every expense on the same day. Links meal and accommodation categories to the relevant rate, and flags any claim above it.
Accommodation and trips	Employees submit hotel and flight requests in the app, and your travel team approves them before the trip starts. Mileage and expenses then sit against each trip’s budget and purpose.
Overseas travel	Sets subsistence rates by country and location, and flags any claim above the applicable rate. For organisations with employees in Ireland, Irish Revenue civil service rates are included as standard.

Software applies the rules you set, so your organisation still needs a mileage and subsistence policy that matches HMRC’s. The subsistence and overseas rules in this guide are general guidance, not tax advice. Check HMRC’s published rates, and speak to an adviser before relying on them.

Make HMRC travel expense rules work for you

Most of HMRC’s travel and expense rules are simple on their own. The risk sits in the detail: the right rate for the journey date, the right subsistence band, and a receipt you can still produce years later. With a new mileage rate arriving in April 2027 and new subsistence rates in April 2028, now’s a good time to check your process.

Start with your rate tables, then your policy, then your records. Make sure every rate has an effective date, your policy matches HMRC’s rules, and every receipt is kept for the full retention period.

If you’d like to see how Capture Expense handles mileage, subsistence, and trip approvals, book a demo with a member of our team or take a product tour at your own pace.

Frequently asked questions

Q. What is the HMRC mileage rate for 2026-27?

A. 55p per mile for cars and vans on the first 10,000 business miles, then 25p above that. Motorcycles are 24p and bicycles 20p at all mileages, with a 5p per passenger per mile supplement where the passenger is on their own work journey. From 6 April 2027, the rate above 10,000 miles rises to 35p.

Q. Which rate applies to a late claim for an earlier journey?

A. The rate for the date of the journey, not the date of the claim. A journey made in March 2026 is paid at 45p even if the claim arrives in June, and paying it at 55p creates a taxable, reportable excess.

Q. What are the HMRC subsistence rates?

A. £5 for a journey of at least 5 hours, £10 for at least 10 hours, and £25 for at least 15 hours where the journey is ongoing at 8pm. The older four-rate table topping out at £15 was superseded from 6 April 2016. From 6 April 2028, they rise to £20, £60, and £75 (for journeys over 24 hours).

Q. Does HMRC accept photos of receipts?

A. Yes, provided the image is legible and preserved for the full retention period. It must show what the paper showed, including the supplier’s VAT number where you are recovering VAT.

Q. How long do expense records have to be kept?

A. Six years from the end of the accounting period for company and accounting records, at least six years for VAT records, and three years from the end of the tax year for PAYE and expenses records.

Q. When does a temporary workplace become permanent?

A. When the employee has attended, or expects to attend, for more than 24 months and spends 40% or more of their working time there. Both tests have to be met, and the expectation matters as much as the elapsed time.

Q. How does Capture Expense handle subsistence claims?

A. You set UK and overseas rate bands by journey hours and link meal and accommodation categories to them. Departure and return times set the band for every expense on the same day, and any claim above the applicable rate is flagged.

Q. Can Capture Expense handle overseas subsistence?

A. Yes. You set rates by country and location, and any claim above the applicable rate is flagged. Check your bands against HMRC’s published overseas scale rates. From 6 April 2028, HMRC plans to replace the 200+ destination rates with a tiered system, so expect to update them then.

Q. How do you approve travel before a trip?

A. Employees submit hotel and flight requests in Capture Expense, and your travel team approves them in the app before the trip starts. Mileage and expenses then sit against the trip’s budget and purpose.