Using a personal car or vehicle for business trips is common in organisations across various sectors, including consultants, self-employed and limited company business owners.
Through the HMRC mileage rate, business owners can claim some of that mileage back. Until recently, the approved mileage rate from HMRC was 45p per mile for the first 10,000 business miles in a tax year, and 25p per mile for any miles over 10,000.
Now, for the 2026/27 tax year, it’s risen to 55p, offering up to £400 more than the old rate.
How does the increase in HMRC mileage rate matter for businesses across the UK?
Self-employment mileage claims
If you’re self-employed in the UK, the approved mileage rate from HMRC is the amount of money you can claim as an expense against your profits.
There is no need to provide fuel receipts, or to work out the actual running costs. All you need to do is calculate the total miles, multiplied by the new rate.
Employee mileage claims
For those who are employed and use your own car for work, your employer can pay you this mileage up to this rate tax-free.
If they pay you less than 55p a mile (up to 10,000 miles), you can claim tax relief on the difference through your Self-Assessment return or a P87 form.
How the new HMRC mileage rate works in practice
Say you drive 4,000 business miles this year. At 55p a mile, that’s £400 you can claim more, up from what the old rate would have given you. If you do 10,000 miles that would be an additional £1000, please note over 10,000 miles it’s still 25p a mile. Please note, this is for tax returns after April 2026, so the return due on 31st January 2027, for April 2025/26 would retain the 45p rate.
This HMRC mileage rate doesn’t apply to everyone
This new rate for 2026 only applies to cars and vans.
Motorcycles and bikes have their own separate rates, and if you’re claiming actual costs instead of mileage (less common, but sometimes worth it for higher-mileage drivers), different rules apply entirely.
If you’d like further support with your mileage claims, get in touch with us today.
Check your expense claims
With this change in mind, it could be a great time to check your expense claims.
It’s important to check whether your claims and mileage log are using the current rate, not last year’s figure, to ensure you get the most out of your money this year.
If you’re an employer reimbursing staff, make sure your payroll or expenses system has been updated too.
To stay up to date with relevant HMRC changes, or if you’re not sure whether mileage or actual costs work out better for you, we can run the numbers on your behalf.
Contact us today on 0800 999 1800, or send us an email at info@taxdriven.co.uk.
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