HMRC adds 10p per mile to tax-free allowance for | Tech News

HM Revenue and Customs (HMRC) has added an further 10p per mile tax-free allowance for car and van drivers who use their automobiles for business journey.

The authorities introduced the new mileage allowance charges for the 2026 to 2027 tax 12 months in an replace final month, confirming that Approved Mileage Allowance Payments (AMAPs) have elevated from 45p to 55p per business mile for the primary 10,000 business miles travelled within the present tax 12 months – an increase of 10p per mile and the primary change to charges in 15 years. The identical fee additionally applies for personally owned electric automobiles and can stay in place till April subsequent 12 months.

Approved mileage charges are utilized by employers to reimburse staff for mileage incurred on business journeys. The charges are designed to cowl the prices of working a vehicle, together with fuel, repairs and servicing, with the quantity per mile various relying on the kind of vehicle and quantity of miles lined per 12 months.

While charges for personally owned automobiles and vans have elevated from 45p to 55p per business mile for the primary 10,000 business miles, charges for every business mile over 10,000 stay unchanged at 25p per mile, having been in place since 2001.

An extra 5p per business mile will also be claimed for every fellow worker you keep on a business journey in your car or van.

As effectively because the elevated mileage charges for automobiles and vans to 55p, HMRC has additionally confirmed a 24p fee for journey in motor cycles and a 20p fee for bicycles within the 2026/27 tax 12 months. These stay unchanged since 2011.

Commenting on the revised HMRC accredited mileage charges for this tax 12 months, the Association of Taxation Technicians (ATT) mentioned: “Following the announcement, AMAPs, Mileage Allowance Relief (MAR) and self-employed mileage have now increased from 45p to 55p per business mile for the first 10,000 business miles travelled in the tax year.

“The 25p per mile for any remaining mileage in a tax year (which has been in place since 2001) remains unchanged, as is the 5p per business mile rate for passenger payments and the 24p rate for travel in motor cycles and the 20p rate for bicycles.

“The ATT previously made a budget submission calling for rates to be reviewed, given the increase in the running costs of a vehicle since the main rate for travel in an employee’s car or van last increased in 2011. We therefore welcome the announcement of increased rates for 2026/27, but would like to see the rates reviewed in a more regular basis in future.”

The mileage allowance increase has been welcomed after a 15-year freeze, with accountancy consultants saying it should give some reduction to those that are self-employed – however provided that you drive much less than 10,000 miles.

Lee Murphy, Managing Director at The Accountancy Partnership, mentioned: “Many self-employed people like tradespeople will rely on their personal vehicle to drive between jobs, be it a van or a car. They’ve likely been absorbing persistent cost of living increases associated with that vehicle, such as rising fuel and maintenance fees.

“The change in allowance marks a step in the right direction, something that can make a practical and meaningful difference to their taxable profits. As small as it sounds, that 10p extra can provide cash flow relief and increase financial security on something relied upon for work.

“What’s really useful to see is that the new 55p rate can be backdated to April 2026. We advise our clients to keep accurate mileage records, so it’s great to know they’re able to receive the full benefit of the change this tax year, not next.

“Though we welcome the change for self-employed people relying on their vehicles, it was likely needed sooner. The old rate of 45p has been around for 15 years. Costs have mounted since then for numerous reasons, with support for small businesses needing to keep up.

“It’s also important to point out the rate above 10,000 miles remains unchanged. This still sits at a lower rate of 25p. So, for self-employed people who drive frequently for work, the overall benefit may not carry you all the way down the road.”

Listed is the up to date accredited mileage charges for the 2026/27 tax 12 months, as confirmed by HMRC:

Updated Cars and Vans Rates