In a significant change that will benefit millions of employees and self-employed individuals across the UK, the government has announced an increase to the Approved Mileage Allowance Payment (AMAP) rates, backdated to 6 April 2026. This is the first uprating of these rates in fifteen years and represents a meaningful boost for anyone who uses their own vehicle for business travel.
What Are the New Mileage Rates?
The updated rates are as follows:
- 55p per mile for the first 10,000 business miles in a tax year (up from 45p)
- 25p per mile for every mile above 10,000 (unchanged)
All other mileage rates remain the same. The increase applies retrospectively from 6 April 2026, meaning it covers mileage already driven since the start of the current tax year.
Why Does This Matter?
The Exchequer Secretary to the Treasury, Dan Tomlinson, set out the scale of the change clearly:
“This will represent the largest ever increase to these mileage rates, benefitting around 2 million employees and 1 million self-employed individuals, saving over £120 a year for a worker doing 6,000 business miles.”
For employees and self-employed individuals who regularly travel for work, this is a tangible saving — and one that arrives at a time when the cost of running a vehicle remains high.
What Does This Mean for Employees?
If your employer reimburses you for business mileage, they are now able to pay you at the new 55p rate for the first 10,000 miles. However, employers are not obliged to increase their reimbursement rates automatically, so it is worth checking what your employer currently pays.
If your employer reimburses you at a rate below the new AMAP rate, you are entitled to claim tax relief on the difference through HMRC’s job expenses relief process. HMRC is currently updating its claim forms to reflect the new rates, so if you need to make a claim, check that you are using the most current version.
Importantly, because the increase is backdated to 6 April 2026, employers who reimbursed employees above the old 45p rate during April and May — and deducted tax and National Insurance on those payments — may need to re-run their payroll for those months to correct the position. If you are an employer or payroll manager, this is something to address promptly to ensure your employees are not out of pocket.
What Does This Mean for the Self-Employed?
If you are self-employed and use the simplified mileage expenses method, you will be able to apply the new 55p rate when completing your 2026/27 Self Assessment return. Given that the change is backdated to 6 April 2026, the new rate applies to all business mileage driven from the start of the current tax year.
If you have already been recording your mileage, simply ensure you apply the updated rate when you come to calculate your expenses. If you use accounting software, check whether it has been updated to reflect the new figures.
Do You Need to Do Anything Now?
That depends on your situation:
- Employees — check what rate your employer is paying and consider whether a job expenses claim is appropriate if it falls below 55p per mile
- Employers and payroll managers — review your April and May payroll if you reimbursed above the old rate and deducted tax and NIC on those amounts
- Self-employed individuals — update your mileage records and expense calculations to apply the new rate from 6 April 2026
How Atek Can Help
Whether you are an employee wanting to claim tax relief, an employer needing to review your payroll, or a self-employed individual managing your own accounts, the team at Atek is here to make sure you are getting the full benefit of this change and staying on the right side of HMRC.
Get in touch with us today and we will make sure everything is in order.
