From 6 April 2026, HMRC’s approved mileage rate for cars and vans rises to 55p per business mile for the first 10,000 miles, then 25p thereafter. Motorcycles stay at 24p, bicycles at 20p, and you can pay a passenger rate of up to 5p per mile for colleagues riding along on business trips. The rest of this guide covers how to report payments above or below these rates, what Mileage Allowance Relief means for you, and exactly what records HMRC expects to see.
TL;DR:
- Employers must accurately report excess payments over 55p per mile for the first 10,000 miles to avoid taxable earnings and NICs liabilities.
- Mileage logs need to be kept contemporaneously, detailing trip specifics, vehicle used, and separate logs for multiple vehicles to prove mileage thresholds.
- Payroll and expense systems must be updated to reflect the new 55p rate and backdated reimbursements corrected before the end of the tax year.
- Confusing AMAPs with AFRs or simplified rates can lead to payroll mistakes; they serve different schemes and should be applied correctly.
- Companies should audit payroll setups and mileage tracking processes to prevent errors related to the recent rate increase and ensure compliance.
Table of Contents
- Mileage allowance rates 2026/27: the official table
- AMAPs, AFRs and simplified expenses: which rate applies to you?
- What happens if you pay more or less than the approved rate?
- Record-keeping and a worked example
- Getting your systems ready for the new rates
- An accountant’s view on the 2026 mileage change
- Sources
Mileage allowance rates 2026/27: the official table
Here’s the full picture for the current tax year, straight from HMRC’s own published figures.
| Vehicle type | Rate |
|---|---|
| Cars and vans (first 10,000 business miles) | 55p per mile |
| Cars and vans (over 10,000 business miles) | 25p per mile |
| Motorcycles | 24p per mile |
| Bicycles | 20p per mile |
| Passenger payments (per passenger, per mile) | Up to 5p per mile |
These approved mileage rates took effect on 6 April 2026 and apply for the whole 2026/27 tax year, running to 5 April 2027. The 10,000 mile threshold resets every tax year, and it’s a per-vehicle limit if you use more than one car for business during the year, not a fresh limit for each one.
If you drive a personally owned electric or hybrid car for business, the same rates apply. HMRC doesn’t run a separate mileage scale for EVs claimed under AMAPs, so a fully electric hatchback and a diesel estate are treated identically for this purpose, even though their running costs differ considerably.
AMAPs, AFRs and simplified expenses: which rate applies to you?
These three schemes get confused constantly, and mixing them up is one of the most common payroll errors I come across.
- Approved Mileage Allowance Payments (AMAPs) are what an employer pays staff for using their own car, van, motorcycle or bicycle on business journeys. The 55p/25p figures above are AMAP rates.
- Advisory Fuel Rates (AFRs) apply only to company cars, where the business owns or leases the vehicle. AFRs are updated quarterly and cover fuel only, since the employer already bears the wear-and-tear cost of the vehicle.
- Simplified mileage rates are the self-employed equivalent of AMAPs, letting sole traders claim a flat rate per mile instead of tracking actual running costs like fuel, insurance, repairs and depreciation.
The legal basis for AMAPs sits in tax legislation on employee travel expenses, and getting the scheme right matters for National Insurance too. Pay AMAP rates correctly and there’s no NICs liability on the payment; muddle AMAPs with AFRs on a company car and you risk under or over-reporting on the payroll.
What happens if you pay more or less than the approved rate?
Get this wrong and either the employee ends up out of pocket or the business ends up with an unwelcome PAYE bill.
- Pay above the approved rate. The excess over 55p/25p (or the motorcycle, bicycle and passenger equivalents) counts as taxable earnings. Employers must run it through payroll or report it on a P11D, and Class 1 NICs may apply to that excess.
- Pay below the approved rate. The employee can claim Mileage Allowance Relief (MAR) on the shortfall, usually through Self Assessment or a job expenses claim if they don’t already file a return.
- Work out the position. HMRC’s own calculation guidance follows three steps: total the mileage payments actually received, deduct the approved amount for those miles, then see whether the result is positive (taxable) or negative (MAR claim available).
Employees who aren’t required to complete Self Assessment can send a MAR claim by post or phone rather than filing a full return.
Record-keeping and a worked example
HMRC expects contemporaneous records, not a reconstruction six months later when an enquiry letter lands. Keep, for every business journey: the date, start and end points, the purpose of the trip, the mileage covered, and which vehicle was used. An odometer reading or an app-generated log works well; a vague note scrawled after the fact does not.
Pro Tip: Keep separate mileage logs for each vehicle if you use more than one during the tax year. HMRC’s guidance on taxing mileage payments treats mileage cumulatively across the tax year, so mixing vehicles in one log makes it far harder to prove where the 10,000 mile threshold was reached.
Here’s the arithmetic in practice. Say an employee drives 12,000 business miles in 2026/27 and the employer pays 55p a mile flat, regardless of distance:
- Approved amount: (10,000 × 55p) + (2,000 × 25p) = £5,500 + £500 = £6,000
- Actual payment received: 12,000 × 55p = £6,600
- Result: £600 taxable excess, reportable via payroll or P11D
Commuting between home and a permanent workplace is normally excluded from business mileage entirely, so separate it out in the log rather than folding it into the total.
Getting your systems ready for the new rates
The 2026 uplift was the first change to AMAPs since 2011, so a lot of payroll software and expense spreadsheets are still hard-coded to the old figure. A few practical steps now save a messy correction later.
- Check payroll software and expense templates for the previous car rate and update every reference to 55p and 25p.
- If staff have already been reimbursed since 6 April 2026 at the old rate, work out the backdated shortfall and process it through payroll.
- Put your mileage policy in writing, covering which rate applies, how passenger payments work, and how mileage should be logged and submitted.
- Self-employed drivers should decide between simplified mileage rates and actual costs per vehicle, and stick with that method for as long as the vehicle stays in business use.
- Move mileage logs into a cloud accounting system such as Xero, FreeAgent or QuickBooks so records are exportable if HMRC ever asks.
An accountant’s view on the 2026 mileage change
The rate rise itself is straightforward. What catches businesses out is everything sitting underneath it: payroll systems still running old figures, mileage logs that were never contemporaneous in the first place, and directors who genuinely believe AFRs and AMAPs are the same scheme with two names.
I’m Chris White, an AAT-licensed accountant based in Hildenborough near Tonbridge, and system-led bookkeeping and payroll are a core part of what I do for sole traders, landlords and small employers across Kent. In practice, three mistakes come up again and again: businesses paying the old car rate without realising it changed, employees keeping mileage logs that are reconstructed from memory rather than recorded at the time, and payroll teams applying advisory fuel rates to privately owned vehicles when AMAPs should apply instead.
Fixing this properly usually means auditing payroll settings, setting up a mileage tracking process that produces exportable evidence, and correcting any retrospective underpayments before they turn into a bigger reconciliation job at year end. If any of that sounds like your current setup, get in touch through my contact page and I’ll talk you through it plainly, without the jargon.
— Chris
Sources
- Travel — mileage and fuel rates and allowances
- Expenses and benefits: business travel mileage for employees’ own vehicles
