Key Expense Changes for the 2026/27 UK Tax Year

Updated June 2026 to reflect the new advisory fuel rates effective 1 June 2026 and HMRC’s increase to approved mileage allowance payments.

A new tax year is here—and with it, a fresh set of rates, rules, and updates that affect how you handle expenses. While some are minor adjustments, others are more significant. Either way, now’s the time to make sure your expense policy, your reimbursement processes, and your system settings are all reflecting the right figures.

 

For 2026/27, the key expense changes are: van benefit charge up to £4,170, car fuel multiplier up to £29,200, AMAP rates unchanged at 45p/25p, and mandatory BIK payrolling from April 2027.

Approved mileage allowance payments (AMAPs) have increased

After 15 years frozen at 45p, HMRC has increased the approved mileage rate for cars and vans. Published on GOV.UK on 21 May 2026 and backdated to 6 April 2026, the new rate now applies:

** Vehicle **	** First 10,000 business miles **	** Above 10,000 miles **
Cars and vans	55p per mile (up from 45p)	25p per mile (unchanged)
Motorcycles	24p per mile (unchanged)	24p per mile
Bicycles	20p per mile (unchanged)	20p per mile

The passenger payment rate also stays at 5p per mile, per passenger.

This is the change most likely to need action right now. If you reimburse employees for business travel in their own vehicles, your expense system and policy should reflect the 55p rate—and because the increase is backdated to 6 April, you may want to consider a top-up for any mileage already reimbursed at 45p this tax year. Employees reimbursed below the approved rate can claim Mileage Allowance Relief on the shortfall.

Advisory fuel rates for company cars

Advisory fuel rates (AFRs) apply to company cars; approved mileage allowance payments (AMAPs) apply to employees’ personal vehicles—they are different rates for different situations.

While AMAP rates are static, HMRC’s  advisory fuel rates  for company cars are reviewed every quarter—so these can change throughout the year. The rates effective from 1 March 2026 are:

 

Petrol

Engine size	Rate per mile	LPG rate per mile
Up to 1400cc	14p	11p
1401cc to 2000cc	17p	13p
Over 2000cc	26p	21p

Diesel

Engine size	Rate per mile
Up to 1600cc	15p
1601cc to 2000cc	17p
Over 2000cc	23p

Electric

Charging type	Rate per mile
Home charging	7p
Public charging	15p

For hybrid vehicles, HMRC treats them as either petrol or diesel—so apply the relevant rate based on the engine type.

 

These advisory rates matter if your employees drive company cars and reclaim fuel costs. Reimbursing above the advisory rate creates a  benefit in kind (BIK)  liability unless the employee repays the excess. HMRC updates these rates on 1 March, 1 June, 1 September, and 1 December each year—so it’s worth bookmarking and checking them regularly.

 

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Company car and van benefit charges for 2026/27

What’s changed for this year?

Following the  [2025 Autumn Budget](https://www.gov.uk/government/collections/budget-2025) , the company car and van benefit charges have increased in line with the  [September 2025 Consumer Price Index (CPI)](https://www.ons.gov.uk/releases/consumerpriceinflationukseptember2025) . Here’s what that looks like:

 

** Charge **	** 2025/26 rate **	** 2026/27 rate **
Van benefit charge	£4,020	£4,170
Van fuel benefit charge	£769	£798
Car fuel benefit charge multiplier	£28,200	£29,200

These charges apply when employees use company vehicles for private journeys (including commuting) and don’t pay for the fuel themselves. The charges are used to calculate the taxable benefit, so both employees and employers will feel the impact.

 

For a more detailed breakdown of how car fuel benefit is calculated and reported, take a look at our  company car fuel benefit guide for 2026/27 .

 

Key expense-related dates for 2026/27

Here’s a handful of important compliance dates to keep in your calendar this year:

 

Date	What’s due
6 April 2026	2026/27 tax year begins
31 May 2026	P60s must be issued to employees
6 July 2026	P11D deadline—report employee benefits and expenses
19 July 2026	Class 1A NI payment deadline (by cheque)
22 July 2026	Class 1A NI payment deadline (electronic)

The  P11D  is the one that matters most from an expense perspective. It’s used to report taxable benefits in kind—so company cars, fuel benefits, and any non-exempt expense payments all need to be captured accurately. 

 

What’s changing for P11Ds and payrolling benefits in kind?

From April 2027, the P11D process as we know it is going away for most benefits. Payrolling benefits in kind (BIK) will become mandatory, meaning you will be required to report and tax employee benefits through payroll in real time—rather than via an annual form after the fact.

 

This isn’t brand new as voluntary payrolling has been available since 2016. But from 6 April 2027, it won’t be optional anymore.

 

What does that mean in practice?

• Benefits are taxed in real time. Instead of employees receiving a corrected tax code the following year (and sometimes facing an unexpected tax bill), tax on benefits is collected through PAYE each pay period.

• P11Ds will no longer be required for most benefits—but the data feeding into payroll needs to be accurate from day one of the tax year.

• Class 1A NICs will also be reported and paid through payroll in real time, rather than as a single annual payment in July.

Two categories of benefit are excluded from the mandatory change: employment-related loans and employer-provided living accommodation. These will still be reported separately. Everything else—company cars, private medical cover, gym memberships, and similar benefits—will need to go through payroll.

 

For a detailed walkthrough of how  payrolling benefits in kind  works and how to prepare your organisation, we’ve put together a full guide—it’s well worth a read before April 2027 arrives.

 

Get your expenses in order for 2026/27

There’s a fair amount to keep track of at the start of a new tax year, but none of it needs to be stressful. The key is having the right tools and the right processes in place—so that rate changes, receipt capture, VAT reclaims, and policy compliance all happen automatically rather than manually.

 

If you’d like to see how Capture Expense helps organisations stay on top of all of this—from  [mileage tracking](/vehicle-mileage/)  and  [receipt scanning](/receipt-scanning/)  to  [spend controls](/expense-policy-compliance/)  and  [expense reporting](/expense-reporting/) —you’re warmly welcome to  [book a demo](/book-a-demo/) . We’re happy to walk you through how it all works in practice.

 

Find out more about Capture Expense

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