Government Mileage Rate 2026: A Guide for Business Owners

The government mileage rate changed significantly in April 2026, giving businesses and employees a new figure to use when reimbursing travel in privately owned cars and vans.

From 6 April 2026, the approved rate for the first 10,000 business miles increased from 45p to 55p per mile. This was the first increase since 2011. The rate above 10,000 miles remains 25p.

For anyone searching for the government mileage rate 2025, the position is different. During the 2025/26 tax year, running from 6 April 2025 to 5 April 2026, the rate remained 45p for the first 10,000 miles and 25p thereafter.

For business owners, there is more to understand than simply multiplying mileage by 55p. Different rules apply to employees using their own cars, company-car drivers, sole traders, electric vehicles, passenger payments and businesses reclaiming VAT.

This guide explains how the mileage rules work in 2026 and how they differ from 2025.

What Is the Government Mileage Rate for 2026?

The government mileage rates are commonly known as Approved Mileage Allowance Payments, or AMAP rates.

They determine how much an employer can generally reimburse an employee tax-free when the employee uses their own vehicle for qualifying business journeys.

The rates from 6 April 2026 are:

Vehicle	First 10,000 Business Miles	Business Miles Above 10,000
Cars and vans	55p per mile	25p per mile
Motorcycles	24p per mile	24p per mile
Bicycles	20p per mile	20p per mile

The 10,000-mile threshold applies to cars and vans. Motorcycles and bicycles continue to use one rate regardless of the number of qualifying business miles travelled.

These rates are intended to recognise more than fuel alone. Mileage payments can contribute towards costs associated with using a privately owned vehicle for work, including fuel, servicing, repairs, insurance and depreciation.

What Was the Government Mileage Rate 2025?

For the 2025/26 tax year, the approved mileage rates were:

Vehicle	First 10,000 Business Miles	Business Miles Above 10,000
Cars and vans	45p per mile	25p per mile
Motorcycles	24p per mile	24p per mile
Bicycles	20p per mile	20p per mile

Therefore, businesses reviewing historical expense claims should not automatically apply the new 55p rate to journeys made before 6 April 2026.

A journey made on 5 April 2026 falls under the old 45p rate. A qualifying journey made on 6 April 2026 falls within the new tax year and can use the 55p rate.

What Changed From the Government Mileage Rate 2025 to 2026?

The main change is straightforward.

The higher car and van rate rose by 10p per mile, from 45p to 55p.

Mileage Rule	2025/26	2026/27
Cars and vans, first 10,000 miles	45p	55p
Cars and vans, above 10,000 miles	25p	25p
Motorcycles	24p	24p
Bicycles	20p	20p
Additional passenger payment	5p	5p

The increase is particularly important for businesses with employees who regularly use their personal cars for client meetings, site visits, deliveries or travel between workplaces.

For example, an employee completing 8,000 qualifying miles would have an approved amount of:

2025/26

8,000 × £0.45 = £3,600

2026/27

8,000 × £0.55 = £4,400

That creates an £800 difference for the same mileage.

How Have Government Mileage Rates Changed Since 2011?

One of the most notable features of the government mileage rate is how long the main car and van rate remained unchanged.

The 45p figure applied from the 2011/12 tax year through to the end of 2025/26.

Tax Year	First 10,000 Car/Van Miles	Above 10,000 Miles
2011/12	45p	25p
2012/13	45p	25p
2013/14	45p	25p
2014/15	45p	25p
2015/16	45p	25p
2016/17	45p	25p
2017/18	45p	25p
2018/19	45p	25p
2019/20	45p	25p
2020/21	45p	25p
2021/22	45p	25p
2022/23	45p	25p
2023/24	45p	25p
2024/25	45p	25p
2025/26	45p	25p
2026/27	55p	25p

The April 2026 increase therefore ended a long period in which the headline mileage allowance stayed at the same nominal level despite changes in motoring costs.

Is the Mileage Rate the Same as the Advisory Fuel Rate?

No. This is one of the most important distinctions for business owners. Approved Mileage Allowance Payments and Advisory Fuel Rates are designed for different situations.

Feature	Approved Mileage Rate	Advisory Fuel Rate
Mainly Applies To	Employee’s own vehicle	Company car
Covers	Overall vehicle running costs	Fuel or electricity
Main 2026 Car Rate	55p for first 10,000 miles	Depends on fuel and engine
10,000-Mile Threshold	Yes	No
Electric Vehicles	Same AMAP as other private cars	Separate electric rates
Updated	When government changes statutory rates	Normally reviewed quarterly

If an employee drives their own car, the AMAP rules are normally relevant.

If the business provides the employee with a company car, the much lower Advisory Fuel Rates may be used when reimbursing fuel for qualifying business mileage or calculating what the employee should repay for private fuel.

Confusing the two can lead to incorrect expense policies and tax treatment.

What Are the Current Advisory Fuel Rates for Company Cars?

From 1 September 2026, HMRC’s Advisory Fuel Rates for company cars are:

Fuel	Engine Size	Rate Per Mile
Petrol	1,400cc or less	14p
Petrol	1,401cc to 2,000cc	17p
Petrol	Over 2,000cc	27p
LPG	1,400cc or less	11p
LPG	1,401cc to 2,000cc	13p
LPG	Over 2,000cc	20p
Diesel	1,600cc or less	15p
Diesel	1,601cc to 2,000cc	16p
Diesel	Over 2,000cc	22p
Fully electric	Home charging	7p
Fully electric	Public charging	15p

Hybrid company cars are treated as petrol or diesel vehicles for Advisory Fuel Rate purposes.

Because these rates are reviewed periodically, employers with company-car fleets should check the applicable rate for the date of travel rather than relying indefinitely on figures stored in an old expense policy.

Do Electric Cars Get a Different Mileage Rate?

It depends on who owns the vehicle.

Personally Owned Electric Cars

An employee using their personally owned electric car for qualifying business travel uses the normal AMAP car rate.

From 6 April 2026 that means:

• 55p Per Mile For The First 10,000 Business Miles
• 25p Per Mile After 10,000 Miles

A privately owned EV does not drop to the 7p or 15p electric Advisory Fuel Rate simply because it runs on electricity.

Company Electric Cars

The situation is different where the vehicle is a company car.

From 1 September 2026, the Advisory Electric Rates are:

• 7p Per Mile For Home Charging
• 15p Per Mile For Public Charging

Where charging takes place at both home and public locations, a fair and reasonable apportionment can be used.

This distinction is important because applying the company-car electric rate to an employee’s personal EV could substantially understate the approved mileage amount.

How Does the 10,000-Mile Limit Work?

For an employee’s car or van, the higher mileage rate applies to the first 10,000 qualifying business miles during the tax year.

From 2026/27:

• First 10,000 Miles × 55p
• Remaining Miles × 25p

For example, consider an employee who completes 12,000 qualifying miles:

10,000 × £0.55 = £5,500

2,000 × £0.25 = £500

Total approved amount = £6,000

The 10,000-mile limit is based on qualifying business mileage, not the vehicle’s overall annual mileage.

What Happens If an Employee Uses More Than One Vehicle?

Changing cars does not automatically reset the 10,000-mile allowance.

HMRC groups cars and vans as the same type of vehicle for AMAP purposes. Business mileage in different cars and vans used in the same employment is therefore combined.

For example, an employee drives:

• 6,000 Business Miles In Their Car
• 5,000 Business Miles In Their Van

That produces 11,000 combined car and van miles.

The approved amount for 2026/27 is:

10,000 × 55p = £5,500

1,000 × 25p = £250

Total = £5,750

The employee does not receive a separate 10,000-mile higher-rate allowance for each vehicle.

Different categories are treated separately. Motorcycle or bicycle mileage does not count towards the car and van 10,000-mile threshold.

Which Journeys Count as Business Mileage?

Not every journey made because someone has a job or runs a business qualifies.

Common examples of qualifying employee business journeys include:

• Travel Between Workplaces
• Visits To Customers Or Suppliers
• Travel To A Conference Or Business Meeting
• Journeys To Temporary Workplaces
• Travel To Carry Out Duties Away From A Permanent Workplace

Ordinary commuting between an employee’s home and permanent workplace is generally private travel for these purposes.

How Does the 24-Month Temporary Workplace Rule Work?

A location can qualify as a temporary workplace where an employee attends it for a task of limited duration or another genuinely temporary purpose.

However, the 24-month rule can turn a workplace into a permanent workplace.

Broadly, if an employee spends around 40% or more of their working time at a location and attendance lasts, or is expected to last, for more than 24 months, that location can be treated as a permanent workplace.

Travel between home and that workplace would then normally become ordinary commuting rather than qualifying business mileage.

For example, an employee sent to another branch full-time for 18 months may normally be travelling to a temporary workplace.

If the arrangement is known from the beginning to last 30 months, the position can be different because the workplace may be treated as permanent from the outset.

Businesses should therefore look at the expected duration and working pattern, rather than simply assuming that every journey away from the main office qualifies.

How Can Employees Claim Mileage Allowance Relief?

Employers do not have to reimburse employees at the full approved mileage rate.

A company could, for example, choose to pay 40p per mile even though HMRC’s approved amount is 55p.

Where the employer pays less than the approved amount, the employee may be able to claim Mileage Allowance Relief on the difference.

Suppose an employee drives 6,000 qualifying miles in 2026/27.

Approved amount:

6,000 × 55p = £3,300

Employer reimbursement:

6,000 × 40p = £2,400

Difference:

£3,300 − £2,400 = £900

The employee may be able to claim tax relief on the £900 difference.

Importantly, this does not normally mean HMRC pays the employee £900. The £900 is a tax deduction. A basic-rate taxpayer receiving relief at 20%, for example, could potentially reduce their tax by £180.

The actual benefit depends on the employee’s tax position.

Employees who complete a Self Assessment return normally claim through their return. Other eligible employees may be able to use HMRC’s employment-expense claim process or form P87.

How Far Back Can You Claim Mileage Relief?

Mileage claims are worth checking even where employees failed to claim in the original tax year.

HMRC’s job-expense rules generally allow qualifying claims to be made within four years from the end of the tax year concerned.

For example, a qualifying claim relating to the 2025/26 tax year is subject to the time limit measured from the end of that tax year on 5 April 2026.

Employees should retain mileage logs and evidence supporting the business purpose of their journeys, particularly when submitting claims for earlier years.

Where someone already files Self Assessment, the correct route may depend on whether the tax return can still be amended or whether another HMRC claim procedure is required.

How Do Mileage Rules Work for Self-Employed Business Owners?

Sole traders can use simplified vehicle expenses instead of calculating the business proportion of actual vehicle running costs, provided they qualify to use the method.

For 2026/27, the simplified rates are:

Vehicle	Mileage	Flat Rate
Cars and goods vehicles	First 10,000 business miles	55p
Cars and goods vehicles	Above 10,000 business miles	25p
Motorcycles	All qualifying miles	24p

Before 6 April 2026, the first 10,000-mile rate for cars and goods vehicles was 45p.

For example, a sole trader completing 11,000 qualifying business miles in 2026/27 could calculate:

10,000 × 55p = £5,500

1,000 × 25p = £250

Simplified vehicle expense = £5,750

That amount is an allowable business expense calculation rather than a tax-free payment from an employer.

The Simplified Expenses Lock-In Rule

There is an important restriction that is often overlooked.

Once a self-employed person chooses the flat-rate mileage method for a particular vehicle, they must normally continue using that method for that vehicle for as long as it is used in the business.

It is therefore worth comparing the mileage method with actual vehicle costs before making the initial choice.

A business also cannot use simplified mileage expenses for a vehicle where it has already claimed capital allowances on that vehicle or treated its purchase price as a business expense.

Good bookkeeping becomes increasingly important as tax administration becomes more digital. Sole traders affected by Making Tax Digital should make sure mileage and other business expense records are incorporated into their wider digital record-keeping process.

Can Businesses Pay an Extra Amount for Passengers?

Yes.

An employer may pay an additional 5p per passenger per business mile where an employee carries another employee on a journey that also qualifies as a business journey for the passenger.

For example, if an employee carries two colleagues for 100 qualifying miles:

100 miles × 5p × 2 passengers = £10

This passenger payment is separate from the normal mileage allowance.

One important difference is that employees cannot claim Mileage Allowance Relief simply because their employer chooses not to make the additional 5p passenger payment.

Is Mileage Allowance Taxable?

Mileage payments within the approved AMAP amount can generally be paid without an Income Tax charge.

If an employer pays more than the approved amount, the excess can become taxable.

Consider an employee who travels 5,000 qualifying miles during 2026/27 and receives 60p per mile.

Employer payment:

5,000 × 60p = £3,000

Approved amount:

5,000 × 55p = £2,750

Potential taxable excess:

£250

Businesses should make sure their payroll and expenses teams can identify excess payments rather than treating every mileage reimbursement as automatically tax-free.

Where mileage payments stay within the approved amount, employers still need adequate records even though there may be no taxable benefit to report.

How Does National Insurance Apply to Mileage Payments?

The National Insurance treatment deserves particular attention because it does not operate in exactly the same way as the Income Tax AMAP calculation.

For Class 1 National Insurance, HMRC uses a qualifying amount for relevant motoring expenditure.

From 6 April 2026, the NIC mileage rate for cars and vans is 55p for every qualifying business mile. Before 6 April 2026, it was 45p.

This means employers should not automatically assume that the Income Tax calculation using 55p for the first 10,000 miles and 25p thereafter produces the same result for National Insurance.

Where relevant motoring expenditure exceeds the NIC qualifying amount for an earnings period, the excess is generally added to earnings when calculating Class 1 National Insurance.

If payments are below the qualifying amount, there is no equivalent National Insurance version of Mileage Allowance Relief that allows the unused difference to be claimed back.

For businesses with employees completing substantial annual mileage, this distinction is worth building into payroll procedures rather than relying on a single mileage calculation for every tax purpose.

Can a VAT-Registered Business Reclaim VAT on Mileage Payments?

Potentially, but the business cannot simply reclaim VAT on the entire 55p mileage payment.

The mileage allowance represents several costs, including fuel and non-fuel costs. VAT recovery is therefore generally based on the fuel element of the mileage payment.

A VAT-registered employer can use an appropriate fuel-per-mile figure to calculate the fuel element and apply the VAT fraction to determine the recoverable input VAT.

For standard-rated fuel, the VAT calculation is commonly based on the VAT-inclusive fuel amount and the appropriate VAT fraction.

Businesses need supporting evidence, including appropriate fuel VAT invoices or receipts and mileage records.

HMRC expects records such as:

• Mileage Travelled
• Business Purpose Of The Journey
• Relevant Vehicle Details
• Mileage Allowance Rate
• Fuel Element Used
• Input VAT Claimed

The whole mileage payment should not be treated as fuel.

Businesses using software to manage employee expenses may find it easier to combine mileage records, receipts and VAT reporting within their wider accounting software rather than maintaining disconnected spreadsheets.

What Mileage Records Should Businesses Keep?

Accurate records are essential even where mileage payments fall entirely within HMRC’s approved limits.

A practical mileage log should normally contain:

• Date Of Travel
• Starting Location
• Destination
• Business Purpose
• Number Of Business Miles
• Vehicle Used
• Amount Reimbursed
• Passenger Details Where Relevant

Employees claiming tax relief may also need mileage logs showing the reason for the journey and the postcodes of the starting and finishing points.

Employers should have a consistent process for checking claims rather than approving mileage solely from an employee’s total monthly mileage.

GPS mileage apps can help, but businesses should still make sure journeys are correctly classified. Automatic tracking cannot determine by itself whether a particular trip represents ordinary commuting, private travel or qualifying business travel.

What Should Employers Include in a Mileage Policy?

A well-designed mileage policy can reduce payroll errors and prevent disputes between employees and finance teams.

It should establish:

1. Which Vehicles Qualify: Explain the rules for privately owned cars, vans, motorcycles, bicycles and company vehicles.
2. Which Rate The Business Pays: State whether employees receive the full HMRC-approved amount or a lower company rate.
3. What Counts As Business Travel: Distinguish client visits and temporary workplaces from ordinary commuting.
4. How Claims Must Be Submitted: Require dates, locations, purpose and mileage.
5. How Company Cars Are Treated: Make clear that Advisory Fuel Rates are separate from AMAP rates.
6. How Electric Vehicles Are Handled: Distinguish personally owned EVs from company electric cars.
7. How Passenger Payments Work: Explain whether the company pays the optional 5p-per-passenger allowance.
8. How Payroll Handles Excess Payments: Make sure taxable mileage is identified correctly.
9. How Long Records Are Retained: Keep sufficient evidence to support payroll, tax and VAT treatment.

The policy should also be reviewed when HMRC changes either the statutory mileage rate or quarterly Advisory Fuel Rates.

Quick Mileage Calculator for 2026/27

For an employee using their own car or van, the basic calculation is:

Up to 10,000 miles

Business miles × £0.55

More than 10,000 miles

£5,500 + (Miles above 10,000 × £0.25)

Here are some examples:

Annual Business Mileage	Approved Amount 2026/27
1,000 miles	£550
3,000 miles	£1,650
5,000 miles	£2,750
8,000 miles	£4,400
10,000 miles	£5,500
12,000 miles	£6,000
15,000 miles	£6,750
20,000 miles	£8,000

Businesses embedding an online mileage calculator can use the same logic while allowing users to enter mileage, vehicle type and employer reimbursement to estimate both the approved amount and potential Mileage Allowance Relief.

Conclusion

The biggest change to UK mileage expenses in 2026 is the increase from 45p to 55p per mile for the first 10,000 business miles in cars and vans. However, businesses should look beyond the headline figure.

The government mileage rate 2025 still matters for historic claims, while company cars, electric vehicles, VAT, National Insurance, temporary workplaces and self-employed mileage each have their own rules.

Clear expense policies and accurate mileage records can help businesses reimburse staff correctly while avoiding unnecessary tax and payroll problems.

Frequently Asked Questions

What Is the Government Mileage Rate for 2025?

For the 2025/26 tax year, cars and vans qualified for 45p per mile for the first 10,000 business miles and 25p thereafter. Motorcycles were 24p per mile and bicycles 20p per mile.

What Is the Government Mileage Rate for 2026?

From 6 April 2026, the car and van rate increased to 55p per mile for the first 10,000 qualifying business miles. The rate above 10,000 miles remains 25p.

Is the Mileage Allowance the Same for Employees and the Self-Employed?

The headline car and van rates can be the same, but the tax mechanism is different. Employees use the AMAP and Mileage Allowance Relief rules, while eligible sole traders may use simplified vehicle expenses to calculate deductible business costs.

Can I Claim Mileage If My Employer Pays Less Than 55p?

Potentially. If an employee uses their own vehicle for qualifying business travel and receives less than the approved amount, they may be entitled to Mileage Allowance Relief on the difference.

Is Mileage Allowance Taxable in the UK?

Payments within the employee’s approved mileage amount can generally be paid tax-free. Amounts above the approved level may create taxable income and employers should also consider the separate National Insurance rules.

How Far Back Can I Claim Mileage Allowance Relief?

Qualifying employment expense claims are generally subject to a four-year time limit measured from the end of the relevant tax year.

Do Electric Cars Receive a Different Mileage Rate?

A personally owned electric car uses the normal car AMAP rate, including 55p for the first 10,000 miles from April 2026. Separate electric Advisory Fuel Rates apply to fully electric company cars.

Does the 10,000-Mile Allowance Reset If I Change Cars?

Not normally within the same employment. Cars and vans are treated as the same vehicle category, so mileage from multiple cars or vans is combined when determining whether the 10,000-mile limit has been reached.

Can I Claim Mileage Between Home and Work?

Ordinary commuting between home and a permanent workplace generally does not qualify. Travel to qualifying temporary workplaces or journeys made in carrying out employment duties may qualify depending on the circumstances.

Can Parking and Tolls Be Claimed on Top of Mileage?

Qualifying business parking charges and tolls can generally be dealt with separately from the AMAP mileage calculation. The mileage rate itself is not intended to replace every other allowable business travel expense.