From 6th April 2026, the government has increased the approved business mileage allowance for cars and vans from 45p to 55p per mile for the first 10,000 business miles driven each tax year. This is the first increase in the rate since 2011 and is designed to help workers and business owners cope with rising motoring costs.
At eba, we’ll make sure the new rate is correctly applied to the mileage records you provide us from April 2026 onwards, so you can continue claiming the correct tax relief without needing to worry about the calculations yourself.
What is the mileage allowance?
The mileage allowance is HMRC’s approved rate for reimbursing business mileage when someone uses their own personal vehicle for work journeys.
It applies to:
- Employees using their own cars for business travel
- Directors travelling for company business
- Self-employed individuals claiming business mileage expenses
Importantly, this only applies to business journeys and not to ordinary commuting between home and your normal workplace. Examples of qualifying business mileage include:
- Visiting customers or suppliers
- Travelling between business locations
- Site visits
- Attending meetings, networking events or training courses
The new mileage rates from April 2026
The new HMRC approved mileage rates are:
| Vehicle Type | First 10,000 Miles | Over 10,000 Miles |
| Cars & Vans | 55p per mile | 25p per mile |
| Motorcycles | 24p per mile | 24p per mile |
| Bicycles | 20p per mile | 20p per mile |
Only the car and van rate for the first 10,000 miles has changed.
Why this matters for SME business owners
For many small business owners and employees, using a personal vehicle for work is often more practical than running a company car. At eba, we would always advise business owners to discuss any car replacement strategy with us. It’s highly unlikely that we would ever advise on purchasing or leasing a petrol or diesel vehicle through your limited company.
The 55p rate is designed to cover the cost of running a private vehicle for a mile, including fuel and also the depreciation and repair and maintenance cost of the vehicle (a more comprehensive list is shown below). If you do use a personal electric vehicle, the cost per mile is likely to be lower (electricity v. petrol, for example, as well as lower ongoing maintenance costs). That wouldn’t matter, and you could still claim the 55p rate.
The increase from 45p to 55p per mile can make a meaningful difference:
- Higher tax-deductible business expenses
- Better reimbursement for rising fuel and running costs
- Increased tax relief where employers pay less than the HMRC rate (see below*)
For example, if you drive 8,000 business miles in a year, the increase could mean an additional:
8,000 miles × 10p = £800 of allowable business expense or tax-free reimbursement.
*If your business pays lower mileage rates
Some employers reimburse mileage at rates lower than HMRC’s approved allowance.
That’s perfectly acceptable, but employees can then claim tax relief on the shortfall. For example:
- Employer pays 30p per mile
- HMRC approved rate is 55p
- Employee can claim tax relief on the remaining 25p per mile
This can usually be claimed through:
- Self-Assessment tax returns, or
- HMRC’s Mileage Allowance Relief process
Self-employed business owners
If you are self-employed and use the simplified mileage method, the new 55p rate will also apply from 6 April 2026. As intimated above, the mileage allowance covers the general costs of running the vehicle, including:
- Fuel
- Insurance
- Repairs and servicing
- Road tax
- MOTs
- Depreciation
If you use the mileage basis, you cannot normally claim these costs separately.
What records should you keep?
HMRC requires proper mileage records to support claims. We recommend keeping:
- Date of journey
- Start and end locations
- Purpose of the trip
- Number of miles travelled
How eba will help
At eba, we will ensure that:
- The updated 55p rate is used where applicable from April 2026
- Mileage claims are treated correctly in your accounts and tax returns
- Directors’ and employees’ mileage reimbursements are handled tax efficiently
- Claims remain compliant with HMRC rules
So, if you already provide us with mileage records, there is nothing extra you need to do; we’ll take care of applying the correct rates.
Final thoughts
This increase is a welcome change for SME owners, employees and self-employed workers who regularly use their own vehicles for business travel.
With motoring costs having risen significantly over recent years, the updated mileage allowance should provide some additional financial support and improved tax relief opportunities.
If you have any questions about business mileage claims, reimbursements, or tax-efficient travel expenses, speak to the team at eba and we’ll be happy to help.
