For the first time since 2011, HMRC’s approved mileage rates for cars and vans have increased, with the increase being backdated to April 2026.
A pleasant surprise for many businesses, it is worth understanding the impact, considering a review of the Approved Mileage Allowance Payment (AMAP) rate had not been tabled, so it is unlikely you will have prepared for this.
How is the Approved Mileage Allowance Payment rate changing?
A 10p increase will see the first 10,000 miles driven each year in a car or van for work purposes subject to a new 55p per mile rate, up from the 45p per mile rate.
The drop to 25p per mile after the 10,000 miles is unchanged and there is no alteration to the motorcycle rate or bicycle rate, which stay at 24p per mile and 20p per mile respectively.
It is also possible for employees to claim 5p per passenger, per business mile for carrying passengers in their car or van.
How will employees be affected by the Approved Mileage Allowance Payment?
Where employees travel in their own vehicle as part of their regular work duties, it will be possible for them to claim back money for each mile they have driven or cycled.
As an employer, you can choose to reimburse employees above these rates, though the excess will likely be subject to tax and National Insurance.
If you pay below these rates then your employees may be able to claim tax relief on the shortfall, but it would be good for you to make them aware of this.
Now is a good time to review your current mileage reimbursement policy and our expert team is here to assist with this.
If you have any questions about how these changes may impact your business, or if you want to check whether your payroll is set up correctly, then we are happy to help.
Speak to our team for expert advice on tax relief.
