Approved mileage rates increase for first time in 15 years
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Bradley has played a key role in RIFT Group’s growth and evolution since starting as its Sales and Marketing Director in 2010. In 2014, he became RIFT’s Commercial Director, leading the group’s div...
Read More about Bradley PostHere’s what it means for workers, mileage claims and tax relief. This story is developing and will be updated as details emerge.
The Government has announced one of the biggest changes to HMRC mileage rates in over a decade, increasing the Approved Mileage Allowance Payment (AMAP) rate for cars and vans from 45p to 55p per mile for the first 10,000 business miles.
The announcement, made by Chancellor Rachel Reeves and backdated to April 2026, comes as part of a wider package of transport and cost-of-working measures, including a 12-month HGV road tax holiday and a temporary cut to red diesel duty for farmers and the rail freight industry.
For millions of UK workers who use their own vehicles for work, from tradespeople and engineers to the British Armed Forces, healthcare staff and offshore workers, this mileage increase is likely to have the most immediate impact.
The previous AMAP rate had remained largely unchanged since 2011, despite years of rising fuel costs, insurance premiums and vehicle maintenance expenses. During that time, many workers continued paying increasing travel costs simply to do their jobs.
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Mileage Claim CalculatorFor someone driving 10,000 business miles a year, the change increases the approved tax-free mileage allowance from £4,500 to £5,500 annually. That’s up to £1,000 a year back in taxpayers pockets, on top of their other claimable expenses.
Importantly, the HMRC mileage rate is not necessarily what an employer has to pay directly. Many employers contribute towards mileage costs at a lower rate, for example 30p per mile, with workers then potentially able to claim tax relief on the shortfall between what they received and HMRC’s approved rate.
That means this change could increase the amount eligible workers are able to claim tax relief on where their employer does not fully reimburse their business mileage costs.
|
Business miles per year |
Old allowance |
New allowance |
Difference |
|
5,000 |
£2,250 |
£2,750 |
+£500 |
|
8,000 |
£3,600 |
£4,400 |
+£800 |
|
10,000 |
£4,500 |
£5,500 |
+£1,000 |
Bradley Post, Managing Director at RIFT Refunds, said the change was long overdue after years of frozen rates failing to reflect the real cost of work travel.
A 10p rise may sound small, but for someone driving 10,000 business miles a year, it represents an additional £1,000 in approved mileage allowance. That is real money at a time when fuel, insurance and vehicle running costs have put serious pressure on working people.
For years, many workers have effectively subsidised the cost of doing their jobs themselves while mileage rates stood still. This change finally starts to acknowledge that reality.
The move follows growing pressure from unions, industry groups and MPs, who argued that the previous mileage rates no longer reflected modern motoring costs.
While the increase has been widely welcomed, some organisations have pointed out that it still falls short of fully matching inflationary rises in fuel and vehicle costs over the last 15 years.
Ryan Carman, Tax Specialist and Head of Operations at RIFT Refunds, said the announcement also highlighted a wider issue around awareness and understanding of mileage tax relief.
Many PAYE workers still do not realise they may be entitled to tax relief when they use their own vehicle for work and are not fully reimbursed by their employer.
This is particularly relevant in sectors like construction, military, healthcare, engineering and logistics, where travelling between sites, customers or temporary workplaces is often part of everyday work life.
The increase to 55p is positive news, but the most important thing now is helping workers understand what they may be entitled to and how the rules actually apply.
Under HMRC rules, employees may be able to claim Mileage Allowance Relief if their employer pays less than the approved mileage rate for business travel undertaken in a personal vehicle.
The updated 55p rate applies to the first 10,000 business miles annually, while the 25p rate above that threshold, for now, remains unchanged.
For workers already dealing with rising living costs, the announcement represents one of the clearest signs yet that the Government is beginning to recognise the growing financial pressure associated with work-related travel.
If you regularly drive for work and your employer does not fully cover your mileage costs, now is a good time to check whether you could be entitled to mileage tax relief.
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