HMRC mileage rate has gone up to 55p per mile — most drivers are still claiming at the old rate

For more than a decade, the HMRC Approved Mileage Allowance Payment (AMAP) rate sat stubbornly at 45p per mile — a figure last set in 2011 when petrol cost around £1.30 per litre. The government has now updated it to 55p per mile for the first 10,000 business miles per tax year, reflecting the real cost of running a car for work today.

What are the new mileage rates?

The updated HMRC Approved Mileage Allowance Payment rates are:

• Cars and vans: 55p per mile (first 10,000 miles), 25p per mile (above 10,000 miles)
• Motorcycles: 24p per mile (unchanged)
• Bicycles: 20p per mile (unchanged)

The over-10,000-miles rate for cars remains at 25p per mile — this was not changed.

Why does this matter if your employer already pays mileage?

Many employers set their company mileage rate and do not update it automatically when HMRC moves the approved rate. If your employer currently pays you 45p per mile for business travel in your own car, they are now paying you 10p per mile less than the HMRC-approved amount.

That gap — 10p per mile — is what you can claim as Mileage Allowance Relief (MAR) through your Self Assessment tax return. HMRC gives you tax relief on the shortfall at your marginal tax rate. For a basic-rate (20%) taxpayer who drives 10,000 business miles in a year, the numbers look like this:

• HMRC approved rate: 10,000 × 55p = £5,500
• Employer pays: 10,000 × 45p = £4,500
• Shortfall: £1,000
• Tax relief at 20%: £200 back in your pocket
• For a 40% taxpayer: £400 back

What if your employer pays nothing at all?

If your employer does not pay you any mileage allowance for using your personal car for work, you can claim the full 55p per mile on every business mile you have driven. You do not need receipts for fuel — the approved rate is designed to cover all costs (fuel, wear and tear, insurance). Just keep a mileage log.

Who can claim Mileage Allowance Relief?

You can claim MAR if:

• You use your own car (not a company car) for business travel
• Your employer pays you less than the HMRC approved rate (or nothing at all)
• The travel is for work purposes (not commuting to your regular workplace)

Note: commuting from your home to your regular, permanent workplace does not count as business travel. Only journeys to clients, temporary workplaces, or other business locations qualify.

How to claim the relief

If you are not already registered for Self Assessment, you will need to register in order to claim Mileage Allowance Relief. The process is:

1. Register for Self Assessment on GOV.UK if you have not already
2. Complete a tax return for the relevant year(s)
3. In the employment section, enter your total business mileage and the rate your employer paid
4. HMRC will calculate the relief and either adjust your tax code or send a cheque/BACS payment

You can backdate the claim for up to four tax years. If your employer has been underpaying you at 45p per mile for the past four years, the backdated relief could add up to a substantial sum.

Does this apply to electric vehicles?

Yes, but there is a separate rate for electric company cars provided by an employer: the Advisory Electricity Rate (AER) is currently 7p per mile. However, for your own electric car used for business travel, the new 55p AMAP rate applies in the same way as a petrol or diesel car. This is particularly valuable for EV owners, given the relatively higher cost of purchasing and maintaining an EV. Check our EV cost calculator for the full picture.

Can I claim if I am self-employed?

Yes, and for self-employed workers it is even simpler. You can claim the full 55p per mile as a business expense on your Self Assessment return — there is no need to prove what your employer paid, because you are your own employer. Use our self-employed tax calculator to see how mileage claims reduce your overall tax bill.

Frequently Asked Questions

When did the rate change from 45p to 55p?

HMRC announced the increase as part of the 2026 tax simplification package. The new rate applies from the 2026/27 tax year onwards (i.e., from 6 April 2026). Claims for years prior to 6 April 2026 should still use the old 45p rate.

My employer pays 40p per mile — can I claim the full 15p gap?

Yes. The shortfall between what your employer pays and the HMRC approved rate (now 55p) is the amount on which you receive tax relief. If your employer pays 40p, your shortfall is 15p per mile, and you claim tax relief on that 15p at your marginal rate.

Do I need to keep a mileage log?

HMRC recommends keeping a mileage log as evidence of business travel, but there is no mandatory format. A simple spreadsheet recording the date, start and end point, purpose of journey, and miles driven is sufficient. HMRC rarely challenges mileage claims as long as they are reasonable relative to your job type.

My employer pays above 55p — is that taxable?

Yes. If your employer pays you more than the HMRC approved rate (for example, 60p per mile), the excess (5p per mile in this example) is treated as taxable income and must be reported through your tax return or tax code.

Does the new rate apply to my company car too?

No. The AMAP rate only applies when you use your own private vehicle for business travel. If your employer provides you with a company car, different rules apply. The fuel costs for a company car used for business travel are reimbursed through the HMRC Advisory Fuel Rates, which are updated quarterly. See our company car tax calculator for full details.