Mileage allowance to rise to 55p per mile for work journeys
The Chancellor has announced an increase to the approved mileage allowance for employees and self-employed workers who use their own cars or vans for work.
From 6 April 2026, the rate for the first 10,000 business miles in a tax year will rise from 45p to 55p per mile. The change will be backdated to the start of the 2026/27 tax year.
This is a significant update, as the 45p rate has been frozen since 2011.
What does this mean for workers?
If you use your own car or van for work journeys, you may be able to claim mileage at HMRC’s approved rate.
This applies to business journeys only. It does not include your normal commute between home and your regular place of work.
Examples of eligible journeys include:
- travelling between client sites
- visiting customers or suppliers
- care workers driving between appointments
- attending temporary workplaces
- travelling to meetings away from your normal workplace
Where an employer pays mileage up to the approved rate, the payment is usually free from tax and National Insurance.
If your employer pays less than the approved rate, you may be able to claim tax relief on the difference.
New mileage rates for cars and vans
For cars and vans, the approved mileage rate will be:
- 55p per mile for the first 10,000 business miles in a tax year
- 25p per mile for business miles over 10,000 in the same tax year
The increase only applies to the first 10,000 business miles for cars and vans.
The rate for mileage above 10,000 miles remains unchanged at 25p per mile.
Rates for other vehicles
The rates for motorbikes and bicycles are not changing.
They remain:
- 24p per mile for motorbikes
- 20p per mile for bicycles
What does the mileage rate cover?
The approved mileage rate is designed to cover the cost of using your own vehicle for work.
This includes costs such as:
- fuel or electricity
- insurance
- servicing
- repairs
- vehicle tax
- MOTs
- general wear and tear
You cannot usually claim these costs separately if you are claiming the approved mileage rate.
Different rules apply if you use a company car.
How do you claim?
If you are an employee, your employer may pay you mileage directly.
If your employer does not pay the full approved amount, you may be able to claim tax relief from HMRC on the difference.
If you are self-employed, you can usually claim business mileage through your self-assessment tax return.
Other measures announced
The Chancellor also announced a wider package of measures aimed at easing household costs.
These include a temporary VAT cut from 20% to 5% on certain family activities between 25 June and 1 September 2026.
The VAT cut is expected to apply to:
- children’s restaurant meals
- child and family tickets for cinemas, theatres, concerts, shows and exhibitions
- admission tickets for attractions such as:
- amusement parks
- fairs
- museums
- zoos
- soft play centres
- circuses
- adventure parks
- nature reserves
- wildlife parks
- observation decks
The Government says it expects businesses to pass on the VAT savings to customers.
Other announcements included:
- free bus travel for children aged five to 15 in England during August 2026, subject to participation by bus operators and local authorities
- targeted cuts to certain agri-food tariffs, which could reduce the cost of some imported food items such as biscuits, chocolate, dried fruit and nuts
- fuel duty remaining frozen at 52.95p per litre until at least December 2026
What should you do now?
The mileage allowance increase could make a meaningful difference if you regularly use your own car or van for work.
Employees should keep accurate mileage records and check whether their employer will update its mileage policy.
Self-employed workers should also keep clear records of business journeys so the correct amount can be claimed through their tax return.
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