Good news for employees, directors and business owners who use their own vehicle for work.
HMRC has increased the Approved Mileage Allowance Payment rate for cars and vans from 45p per mile to 55p per mile for the first 10,000 business miles travelled each tax year. The rate for miles above 10,000 remains at 25p per mile. The change applies retrospectively from 6 April 2026.
What are the new mileage rates?
Where you use your own vehicle for business journeys, the following rates can be claimed:
- 55p per mile for the first 10,000 business miles
- 25p per mile for business miles above 10,000
These rates apply to cars and vans and can be used by employees, company directors and self-employed individuals using the simplified mileage method.
Does this apply to electric cars?
Yes.
A common misconception is that electric vehicles have a different mileage rate. Under the approved mileage rules, the rate applies to the use of your own vehicle for business purposes, regardless of whether it is electric, hybrid, petrol or diesel. [gov.uk]
What does the mileage rate cover?
The approved mileage rate is designed to cover the costs associated with running a vehicle, including fuel or electricity, servicing, insurance, maintenance and depreciation.
As a result, if you claim mileage using the approved rates, you cannot separately claim these running costs for the same journeys.
What should company directors do?
If your vehicle is personally owned and you use it for business travel, you should ensure your mileage claims reflect the new rates from 6 April 2026 onwards.
With the increase being backdated to the start of the 2026/27 tax year, it may also be worth reviewing any mileage already claimed since 6 April to ensure you’re receiving the correct reimbursement.
Need help?
If you’re unsure whether mileage is the correct method for claiming vehicle expenses, or you’d like us to review your current arrangements, get in touch with the Ultra Accountancy team and we’ll be happy to help.