The tax-free mileage rate for your own car or van stays at 55p a mile for good, and the rate above 10,000 business miles rises from 25p to 35p in April 2027. What you can be paid, what you can claim back and how.
Quick Answer
Budget 2026 makes the 55p a mile tax-free rate for the first 10,000 business miles in your own car or van permanent, and raises the rate above 10,000 miles from 25p to 35p from 6 April 2027. Compared with the old 45p and 25p rates, an employee or self-employed driver doing 10,000 business miles a year can now receive £1,000 more tax-free, and someone doing 15,000 miles £1,500 more. If your employer pays less than 55p, you can claim tax back on the difference.
Cars and vans you own or lease yourself. Published 28 October 2026 from HMRC's rate tables and the Budget document.
| Tax year | First 10,000 business miles | Each mile over 10,000 |
|---|---|---|
| 2011-12 to 2025-26 | 45p | 25p |
| 2026-27 (from 6 April 2026) | 55p | 25p |
| 2027-28 onwards (from 6 April 2027) | 55p | 35p |
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Key points
Does 55p cover your car's fuel?
Enter your reg in the free fuel cost calculator to see what your own car costs in fuel per mile at today's pump prices, and how much of the 55p is left for tax, insurance, servicing and wear.
The approved rate is the most an employer can pay you for business miles in your own car without any tax or National Insurance. Here is the maximum at different mileages, in each tax year.
| Business miles | 2025-26 (45p, 25p) | 2026-27 (55p, 25p) | 2027-28 on (55p, 35p) | More than 2025-26 |
|---|---|---|---|---|
| 2,000 | £900 | £1,100 | £1,100 | £200 |
| 5,000 | £2,250 | £2,750 | £2,750 | £500 |
| 8,000 | £3,600 | £4,400 | £4,400 | £800 |
| 10,000 | £4,500 | £5,500 | £5,500 | £1,000 |
| 12,000 | £5,000 | £6,000 | £6,200 | £1,200 |
| 15,000 | £5,750 | £6,750 | £7,250 | £1,500 |
| 20,000 | £7,000 | £8,000 | £9,000 | £2,000 |
| 25,000 | £8,250 | £9,250 | £10,750 | £2,500 |
The 35p rate only helps people who drive more than 10,000 business miles in a tax year. For everyone else the gain came in 2026-27 with the 55p rate; the Budget's news for them is that it will not go back to 45p.
The government's own example is narrower: it counts the tax saved by a basic rate taxpayer claiming relief, £120 a year at 6,000 miles (6,000 x 10p x 20%) and up to £300 at 15,000 miles (£1,500 x 20%). A higher rate taxpayer would save twice that: £240 and £600.
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Employers do not have to pay the approved rate. If yours pays less, or nothing, you can claim Mileage Allowance Relief on the difference, and HMRC gives you back the tax on it. GOV.UK says you can claim for the current tax year and the four before it, and you must send copies of your mileage logs showing the reason for every journey and the postcodes where each one started and ended (GOV.UK guidance).
| Employer pays | Business miles | Relief you can claim | Tax back at 20% | Tax back at 40% |
|---|---|---|---|---|
| Nothing | 5,000 | £2,750 | £550 | £1,100 |
| Nothing | 10,000 | £5,500 | £1,100 | £2,200 |
| 25p a mile | 10,000 | £3,000 | £600 | £1,200 |
| 35p a mile | 10,000 | £2,000 | £400 | £800 |
| 45p a mile | 5,000 | £500 | £100 | £200 |
| 45p a mile | 10,000 | £1,000 | £200 | £400 |
| 45p a mile | 15,000 | £500 | £100 | £200 |
Many employers paid exactly 45p because it was the old tax-free limit. If yours still does, the whole 10p gap on your first 10,000 miles is now claimable. Business miles means journeys for work, not your normal commute: GOV.UK says the relief does not cover travelling to and from your work unless it is a temporary place of work.
Anything above the approved amount is taxable pay. HMRC's note on the May increase says the rate "is advisory, and employers can choose to reimburse more or less", and if you receive more you pay income tax on the difference (HMRC tax information note). For National Insurance, the amount an employer can pay without Class 1 contributions is worked out at the 55p rate as well.
If you are self-employed and use simplified expenses for a car or van, you deduct the same flat rates from your profits: 55p a mile for the first 10,000 business miles (from 6 April 2026) and 35p after that from 6 April 2027 (OOTLAR 2.7). At 15,000 business miles that is a £7,250 deduction instead of £5,750 under the old rates, £1,500 more, which saves £300 of income tax at 20% before any National Insurance saving (our calculation). HMRC's note points out that once you use simplified mileage rates for a vehicle you must keep using them for as long as it is used in the business.
The approved rate is meant to cover everything: fuel, tax, insurance, servicing, repairs and the car losing value. GOV.UK says you cannot claim separately for fuel, electricity, vehicle tax, MOTs or repairs. Fuel alone, at the average pump prices for the week of 19 October 2026, costs (our calculation):
| Car | Fuel or charging per mile | Left from 55p for everything else |
|---|---|---|
| Petrol, 55mpg | 14.4p | 40.6p |
| Petrol, 45mpg | 17.6p | 37.4p |
| Petrol, 40mpg | 19.8p | 35.2p |
| Diesel, 50mpg | 18.1p | 36.9p |
| Electric, charged at home | 7.5p | 47.5p |
| Electric, public rapid chargers | 22.6p | 32.4p |
From 1 July 2027 fuel duty rises by 7.64p a litre (9.17p with VAT), which adds about 0.9p a mile to a 45mpg petrol car (see our fuel duty guide). Electric cars pay 3p a mile in eVED from April 2028. Above 10,000 miles, 35p covers fuel for most cars with room to spare; 25p left a thirsty car with little over its fuel bill.
Your own car's numbers depend on its fuel use, age and value. The free fuel cost calculator works out its fuel cost per mile from the reg, the depreciation calculator shows how fast it loses value, and the insurance group checker estimates its group.
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55p a mile for the first 10,000 business miles in the tax year and 25p a mile after that, for cars and vans. The 55p rate applies from 6 April 2026; it replaced the 45p rate that had applied since 2011.
55p a mile for the first 10,000 business miles and 35p a mile after that, for cars and vans, from 6 April 2027. Budget 2026 made the 55p rate permanent and raised the higher-mileage rate from 25p.
No. The approved rate is the most an employer can pay without it being taxed, not a minimum. If your employer pays less, you can claim Mileage Allowance Relief from HMRC on the difference. If it pays more, the extra is taxable.
At 10,000 business miles in 2027-28 the approved amount is £5,500 and a 45p payment is £4,500, so you can claim relief on £1,000. That is £200 of tax back for a basic rate taxpayer and £400 for a higher rate taxpayer (England, Wales and Northern Ireland rates; our calculation).
Not for your normal commute. GOV.UK says the relief does not cover travelling to and from your work unless it is a temporary place of work.
Yes. The approved mileage rates for cars and vans apply to your own car whatever it runs on, and they are meant to cover all the costs of owning and running it, so you cannot claim fuel, electricity, tax, MOTs or repairs on top.
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