Mileage Rate Change 2026/27

On 22 May 2026, the government announced the mileage rate change, which businesses can choose to backdate to 6 April 2026. This is the first mileage rate increase in over 15 years, a seemingly small update but one which could have a financial and admin impact for business owners.

 

HOW HAS THE MILEAGE RATE CHANGED?

HMRC’s approved mileage rate for cars and vans has increased by 10p per mile, meaning the new rate is now 55p, from 45p per mile previously.

The first 10,000 business miles per tax year still applies and hasn’t changed. This change will apply from the start of the 2026/27 tax year, effective from 6 April 2026.

 

WHAT HASN’T CHANGED TO THE MILEAGE RATE?

Mileage above 10,000 miles, as well as motorcycle and bicycle mileage hasn’t increased.

Here’s what’s stayed the same for business mileage rates:

Vehicle	Rate per business mile for 2026/27 tax year	Rate per business mile before 6 April 2026
Cars and goods vehicles after 10,000 miles	25p	25p
Motorcycles	24p	24p
Bicycles	20p	20p

Mileage rate for passengers still remains at 5p per mile too.

 

WHAT DOES THIS MEAN FOR BUSINESS OWNERS?

Although a small change, it introduces immediate considerations for business owners; especially around compliance and operational processes.

There’s also an opportunity here: businesses can now reimburse employees up to 55p per mile tax-free, improving employee compensation without increasing tax burden.

If an employee is paid less than 45p, employees are also able to claim Mileage Allowance Relief on the difference by completing a form with HMRC, if they’ve been paid less than 55p per mile since 6 April 2026.

For further information, you can check out HMRC’s page regarding the change here.