HMRC has increased the approved mileage rate for employees using their own car or van for business travel. From 6 April 2026, the rate for the first 10,000 business miles has increased from 45p to 55p per mile.
For many employers, this is a welcome change, but it also raises some practical questions. Do reimbursement rates need updating? Should previous claims be topped up? And what happens if employees continue to receive the old rate?
Here’s what you need to know.
What Are the New HMRC Mileage Rates?
The only change for the 2026/27 tax year is the rate for cars and vans covering the first 10,000 business miles.
| Vehicle | First 10,000 business miles | Over 10,000 miles |
| Cars and vans | 55p per mile | 25p per mile |
| Motorcycles | 24p per mile | 24p per mile |
| Bicycles | 20p per mile | 20p per mile |
The increased rate only applies to business journeys. Ordinary commuting between home and an employee’s normal workplace does not qualify.
Do Employers Need to Increase Their Mileage Rate?
Employers can now reimburse employees up to 55p per mile for qualifying business mileage without creating a tax liability.
Whether you increase your reimbursement rate is a commercial decision. Many businesses will choose to update their mileage policy, while others may decide to continue paying a lower rate.
If you continue to pay less than HMRC’s approved rate, employees may still be able to claim tax relief on the difference.
What About Mileage Already Claimed?
Since the new rate applies from 6 April 2026, some employees may already have submitted mileage claims using the previous 45p rate. Employers can choose to make a top-up payment if they wish.
For example, an employee who has already claimed 500 business miles at 45p per mile could receive an additional:
500 miles × 10p = £50
There is no obligation to make retrospective adjustments, but some employers may decide to do so.
Can Employees Claim the Difference from HMRC?
Yes.
Where an employer reimburses mileage below HMRC’s approved rate, employees can usually claim Mileage Allowance Relief through HMRC. It’s important to remember that HMRC does not pay the full difference. Instead, employees receive tax relief on the shortfall.
For example, if an employee has an unreimbursed mileage difference of £200, the value of the claim depends on their tax rate. A basic-rate taxpayer would receive around £40, while a higher-rate taxpayer could receive around £80.
What Should Employers Do Now?
Now is a good opportunity to review your mileage policy and decide whether it still meets your business needs.
Consider whether you want to:
- Increase reimbursements to the new HMRC rate.
- Make top-up payments for mileage already claimed since 6 April 2026.
- Continue paying your existing rate and advise employees how to claim tax relief.
Whichever approach you choose, it’s important that employees keep accurate mileage records, including journey dates, destinations, business purpose, miles travelled and the amount reimbursed.
The approved HMRC mileage rate for cars and vans has increased to 55p per mile for the first 10,000 business miles from 6 April 2026.
Employers can decide whether to update their reimbursement policy or continue paying a lower rate. Where less than the approved rate is paid, employees may be able to claim Mileage Allowance Relief from HMRC.
If you’re unsure how the new mileage rates affect your business, Greystone Advisory can help. Contact us and we’ll review your mileage policy, explain your options, and ensure you’re reimbursing employees in the most tax-efficient way.
