For the first time since 2011, the government has increased the approved mileage rate for employees using their own car for business travel.
From 6 April 2026, the new rates are:
- First 10,000 business miles: 55p per mile (previously 45p)
- Over 10,000 business miles: 25p per mile (unchanged)
The increase has been backdated to the start of the current tax year, so it applies in full for 2026/27.
What this means for you and your team:
As an employer, you can now reimburse employees at 55p per mile, completely free of tax and National Insurance.
If you pay less than 55p per mile, employees can claim Mileage Allowance Relief (MAR) directly from HMRC on the difference. This could represent a meaningful tax saving for regular business drivers, so it is worth making your team aware.
If you process mileage through payroll, now is a good time to review your expense policy and update your rates accordingly.
Wondering how this sits alongside company car benefits, EV schemes, or wider employee reward packages? We can help you make sense of the options and ensure your business is making the most tax-efficient choices.
Get in touch and let’s talk it through.
