For the first time in more than 15 years, HMRC has increased the approved mileage rate for cars and vans.
From 6 April 2026, the mileage allowance for the first 10,000 business miles has increased from 45p per mile to 55p per mile. The rate above 10,000 miles remains unchanged at 25p per mile. The change has been backdated to the start of the 2026/27 tax year.
For freelancers, directors and business owners who regularly travel for work, this is one of the most significant tax changes of the year.
What Is the HMRC Mileage Allowance?
The HMRC mileage allowance allows you to claim a fixed amount per mile when using your own vehicle for business journeys.
Rather than tracking fuel, servicing, insurance, depreciation and maintenance separately, HMRC lets you claim a simplified mileage rate.
The allowance is designed to cover the overall running costs of your vehicle.
For many small business owners and self-employed individuals, this is often the simplest method of claiming vehicle expenses.
The New HMRC Mileage Rates for 2026/27
The updated rates are:
- 55p per mile for the first 10,000 business miles
- 25p per mile for every mile above 10,000
- 24p per mile for motorcycles
- 20p per mile for bicycles
The increase only applies to cars and vans for the first 10,000 business miles.
Why Has HMRC Increased the Rate?
The previous 45p rate had remained unchanged since 2011 despite substantial increases in fuel costs, insurance premiums, servicing expenses and vehicle ownership costs. This new increase is intended to better reflect the real-world cost of business travel.
The change represents a 22% increase in the approved mileage rate and is the first uplift in over 15 years.
How Much Difference Does It Make?
Let’s assume you drive 8,000 business miles per year.
Under the old system:
8,000 × 45p = £3,600
Under the new system:
8,000 × 55p = £4,400
That’s an additional £800 claim for exactly the same mileage.
For directors, consultants, tradespeople, property investors and freelancers who regularly visit clients, sites or properties, the increase can quickly add up.
What Counts as Business Mileage?
This is where many people make mistakes.
Business mileage typically includes:
- Travelling to client meetings
- Visiting temporary work locations
- Travelling between business premises
- Attending networking events
- Visiting suppliers
However, ordinary commuting does not qualify.
Travelling from your home to your normal place of work is generally considered personal travel and cannot be claimed.
Understanding the distinction is critical because HMRC regularly reviews travel claims during compliance checks.
Is Mileage Better Than Claiming Actual Vehicle Costs?
The answer depends on your situation.
The mileage method is often attractive because it is simple.
You only need to record:
- Date
- Journey
- Business purpose
- Miles travelled
There is no need to allocate fuel costs, insurance, repairs or depreciation.
For many freelancers and directors driving moderate mileage, the mileage method is often the easiest option.
However, if you have a high-cost vehicle or very significant business usage, it may be worth comparing the mileage method against actual vehicle expenses before deciding.
Once you’ve chosen a method for a vehicle, changing later can be restricted, so getting advice before making a decision can save money.
What Should Business Owners Do Now?
Most people will see this increase and think:
“Great, I can claim more.”
That’s true.
But the real opportunity is making sure you’re actually tracking your mileage properly.
I regularly see business owners who:
- Forget to record journeys
- Reconstruct mileage months later
- Miss hundreds or thousands of pounds of legitimate claims
The increase from 45p to 55p makes accurate mileage tracking even more valuable.
Every forgotten 1,000 business miles now represents £550 of potential tax-deductible expenses rather than £450.
The Bigger Lesson
The mileage increase highlights something many business owners overlook.
Tax efficiency isn’t just about finding new deductions.
It’s about consistently claiming the deductions you’re already entitled to.
The business owners who benefit most aren’t necessarily the ones with the best accountants.
They’re the ones with the best systems.
A simple mileage log maintained throughout the year will usually outperform a frantic search for deductions at year-end.
Final Thoughts
The increase from 45p to 55p per mile is welcome news for directors, freelancers, sole traders and business owners.
It provides greater tax relief, better reflects modern vehicle costs and rewards those who keep accurate records.
But the biggest takeaway isn’t the new rate itself.
It’s that every business owner should now review how they’re tracking mileage.
Because a higher allowance only helps if you’re actually claiming it.
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