UK Mileage Rates Rise to 55p: AMAPs and Simplified Expenses for 2026/27

HM Revenue & Customs has confirmed that Approved Mileage Allowance Payments (AMAPs) and the self-employed simplified mileage rates increase from 45 pence to 55 pence per mile for the first 10,000 business miles in cars and vans for the 2026 to 2027 tax year. The higher rate applies retrospectively from 6 April 2026, so employers and sole traders who have been reimbursing or claiming at 45p since the start of the tax year need to catch up.

The change was announced on 21 May 2026 and detailed in HMRC’s tax information and impact note. Miles above 10,000 stay at 25p. Motorcycle (24p) and bicycle (20p) rates are unchanged. Passenger payments remain at 5p per passenger per business mile where the journey is also work travel for the passenger.

Employees using their own car or van for business mileage can be reimbursed tax-free by their employer up to the AMAP rate. The rate is advisory: employers may pay more or less. If you receive less than 55p, you can claim Mileage Allowance Relief (MAR) from HMRC on the difference. Amounts above the AMAP rate are generally taxable.

Self-employed individuals and unincorporated partnerships that use simplified mileage rates (fixed-rate vehicle deductions) can deduct 55p for the first 10,000 business miles and 25p thereafter when calculating taxable profits — instead of claiming capital allowances and actual running costs for that vehicle. Once you choose simplified rates or capital allowances for a vehicle, you must stick with that method while the vehicle remains in the business.

For National Insurance, the Relevant Motoring Expenditure (RME) disregard that employers can take from Class 1 earnings also moves to 55p per mile, aligning the amount that can sit outside Class 1 before excess car-allowance or mileage payments are charged.

Update payroll and expense systems to 55p for business miles from 6 April 2026. If you paid 45p for April–May (or later) miles, calculate the 10p catch-up and pay or claim MAR as appropriate — keep trip logs that show date, purpose, and miles.

Sole traders already on simplified expenses should recompute year-to-date motoring deductions at 55p/25p. Those still on actual costs should not switch mid-vehicle casually — model both methods before changing approach.

Grey-fleet and contractor policies should state the advisory AMAP rate clearly so reimbursements stay tax-efficient. High-mileage roles (over 10,000 business miles) still drop to 25p after the threshold, so cash-cost modelling should not assume 55p for every mile.

Clean mileage logs and categorised vehicle costs make Self Assessment and MTD Income Tax quarterly updates easier to review. FinnAccountings helps UK and Irish sole traders and small companies organise bank feeds, expense categories, and tax prep drafts with Chartered Accountant insight before you or your ICAEW/ACCA or Chartered Accountant (Ireland) adviser reviews figures. Start a free trial to keep motoring claims review-ready — we prepare drafts; we do not file Self Assessment or claim MAR with HMRC on your behalf.

Pair this with our Making Tax Digital Income Tax one-week countdown (first quarterly update due 7 August 2026) and the free tax calculator for high-level planning estimates only. For Ireland and UK VAT set-aside alongside expense prep, use the free VAT calculator.