If you use your own vehicle for business travel, something significant just changed. On 21 May 2026, Chancellor Rachel Reeves announced the first increase to the Approved Mileage Allowance Payment (AMAP) rate in 15 years — raising it from 45p to 55p per mile, backdated to 6 April 2026.
For drivers, employers, and fleet managers, this is one of the most impactful tax changes in years. Here's everything you need to know.
What are AMAPs?
Approved Mileage Allowance Payments are the HMRC-approved system that allows employees to be reimbursed when using their own vehicle for business travel. Rather than claiming back individual fuel receipts, employers pay a fixed, government-approved rate per business mile. Provided payments stay within HMRC's approved rates, they are normally free of both Income Tax and National Insurance.
The rate is designed to cover the full cost of running a vehicle for work — not just fuel, but also insurance, servicing, tyres, vehicle depreciation, road tax and MOT costs.
Why has the rate changed now?
The 45p rate had been frozen since 2011, despite real-world motoring costs rising by an estimated 40% over that period. Industry bodies including the Association of Taxation Technicians, the RAC and the AA had all called for a review, arguing the old rate no longer fairly reflected what it actually costs to run a car.
"I can today announce a 10p per mile increase in tax-free mileage rates, backdated to April 2026, benefiting those who need to drive for work, from care workers to plumbers."
— Chancellor Rachel Reeves, House of Commons, 21 May 2026
The increase forms part of a wider package of transport and cost-of-working measures, including a 12-month HGV road tax holiday and a temporary cut to red diesel duty. For the millions of UK workers who regularly drive for work — tradespeople, engineers, healthcare staff, sales professionals — the mileage rate increase will have the most immediate financial impact.
The new rates at a glance
| Vehicle type | First 10,000 miles | Over 10,000 miles | Change |
|---|---|---|---|
| Cars & vans | 55p per mile | 25p per mile | ↑ +10p |
| Motorcycles | 24p per mile | 24p per mile | Unchanged |
| Bicycles | 20p per mile | 20p per mile | Unchanged |
| Passenger supplement | 5p per mile per passenger | 5p per mile per passenger | Unchanged |
The increase applies to the first 10,000 business miles in a tax year. The 25p rate above this threshold remains unchanged for now, though the government has indicated it will be reviewed at a future Budget.
What does this mean in real money?
The difference adds up quickly. Here's what the new rate means for drivers covering typical annual business mileages:
| Annual business miles | Old rate (45p) | New rate (55p) | Annual gain |
|---|---|---|---|
| 2,000 miles | £900 | £1,100 | +£200 |
| 5,000 miles | £2,250 | £2,750 | +£500 |
| 8,000 miles | £3,600 | £4,400 | +£800 |
| 10,000 miles | £4,500 | £5,500 | +£1,000 |
Backdated to April 2026 — check your mileage records now
Because the increase applies from 6 April 2026, any business mileage you've already driven this tax year qualifies for the higher rate. If your employer has been paying at 45p, you may be owed an adjustment — or you can claim Mileage Allowance Relief (MAR) on the difference via self-assessment or form P87.
What counts as business mileage?
To claim under AMAPs, journeys must be genuine business travel. This typically includes:
- Travel to customer appointments and client sites
- Visits to temporary workplaces
- Supplier meetings away from your normal office
- Travel between different offices or business locations
- Site visits and inspections
Ordinary commuting — travelling from your home to your regular, permanent workplace — does not qualify. HMRC is clear on this, and accurate record-keeping is essential.
Record-keeping: what you need to log
HMRC expects a clear mileage log to support any AMAP claim. For each journey, you should record:
- The date of travel
- Start point and destination
- The business purpose of the trip
- The number of miles driven
Many businesses now use dedicated mileage tracking apps or fleet management software to keep this simple. A reliable log protects both the employer and the employee in the event of any HMRC query.
How does this affect your vehicle choice?
The increase to 55p per mile changes the financial calculation for drivers weighing up their options. For those covering significant annual mileages, the comparison between grey fleet (using your own car), a company vehicle, or a personal lease has shifted. It's worth considering:
- Whether your current vehicle remains cost-effective at today's running costs
- Whether a business lease van or car — with fixed, predictable monthly costs — might offer better overall value
- The Benefit in Kind (BiK) tax implications of a company car versus grey fleet mileage
- Whether electric or hybrid vehicles could reduce your running costs and improve your reimbursement position
If your employer pays below the HMRC rate
Employees reimbursed below the approved rate are entitled to claim Mileage Allowance Relief on the shortfall. If you've been paid 45p per mile since 6 April 2026, you can claim tax relief on the 10p difference for every eligible business mile driven.
The bottom line
The AMAP increase is the most significant change to business mileage rates in a generation. For drivers using their own vehicles for work, it means more tax-free money to offset real motoring costs. For employers and fleet managers, it's the moment to review your reimbursement policies, ensure your payroll reflects the new rate from 6 April 2026, and consider whether your current vehicle strategy still makes sense.
Not sure what the right vehicle setup looks like for your business? Talk to the Crusader Vans team — we help businesses across the UK find the most tax-efficient, cost-effective solutions every day.
This article is intended as general guidance only and should not be considered tax advice. Businesses and individuals should seek guidance from their accountant or tax adviser regarding their specific circumstances and HMRC compliance requirements.
