HMRC have announced an increase to the Approved Mileage Allowance Payment (AMAP
Chancellor Rachel Reeves has announced a 10p per mile increase to tax-free mileage rates, backdated to 6 April 2026, as the approved mileage allowance payment (AMAP) rate for cars and vans rises from 45p to 55p per mile for the first 10,000 business miles that you travel in a tax year.
To confirm, the revised AMAP rates are as follows:
- 55p per mile for the first 10,000 miles (increased from 45p per mile)
- 25p per mile for any business mileage over 10,000 miles (unchanged)
The rates for motorcycles and bicycles remain unchanged.
The previous rate of 45p per mile had been in place since 2011, i.e. there had been no change/increase in 15 years. In that time, the cost of fuel, insurance and running a vehicle for work has risen considerably, and so this is a most welcome change.
Who will this impact?
Employers
Employers will need to consider the business mileage reimbursement payments that they are making, taking specific care to consider that the change in the rate for the first 10,000 business miles is backdated to 6 April 2026. Employers may want to increase the amount they have reimbursed for business mileage in previous pay runs, i.e. for employees paid from the start of the tax year, in line with the new rates.
Employees
As has always been the case, an employee can claim tax relief on the difference between the amount reimbursed by their employer and the approved rate (assuming that they are paid at a lower rate). This is even more important than has historically been the case as (a) the approved rate is now higher and so any difference between the rate paid to the rate allowed is greater and (b) employers may not go back and reimburse the difference for April and May 2026 (if mileage payments have already been paid out based upon 45p per mile) and so additional tax relief will be available.
Self employed individuals
Self employed sole traders have the option of claiming expenses related to business travel by one of two ways. Option one is to calculate the total vehicle expenses incurred and claim the work/business related percentage of the overall costs. The second option, often seen as the simpler option, is to keep a record of the business mileage travelled and make a claim at the AMAP rates. The increased allowance for the first 10,000 miles will allow for an increased business expenses claim and therefore reduce the trading profits that are liable to tax and national insurance. Caution needs to be taken here, as you are unable to switch between the two options for one vehicle, i.e. if you have previously claimed the “work percentage” of total costs for a vehicle in one tax year, you are unable to move to an AMAP claim basis whilst using the same vehicle.
Rental property owners
As with self employed individuals, a mileage claim can be made for business related journeys. This expense can be offset against the rental income that is received to reduce the tax liability that is payable on the rental profits generated.
What counts as a business mile?
Business miles are journeys made for genuine work purposes, such as travelling to a client site, visiting a temporary workplace, or attending a work meeting. The regular commute between home and a fixed place of work does not count as a business journey.
Additional advice
Whilst this is not a new requirement, we are keen to stress the importance of maintaining an up-to-date business mileage log, to support any employment/business expenditure claims that are being made. We are seeing a much more pro-active approach from HMRC and ensuring that you have full backing data to support claims is more important than ever.
If you would like to discuss the impact of the above noted change in tax legislation, please do not hesitate to contact us at Harling and Kirk Accountants.
office@harlingkirkaccountants.co.uk
01494 306 002