The Chancellor of the Exchequer last week announced a 10p per mile increase in the tax-free mileage rate that applies to the first 10,000 business miles travelled in a car or van in a tax year.
The increase, which has been backdated to April 2026, means that the rates for the 2026-27 tax year are now as follows:
| Kind of vehicle | Business miles | Pence per mile |
| Car or van | First 10,000 | 55p |
| Car or van | After 10,000 | 25p |
| Motorcycle | All | 24p |
| Cycle | All | 20p |
Cars and vans include electric and hybrid cars and vans as well as those that run on petrol and diesel. Note that a business can only use these rates if capital allowances have not been claimed on the vehicle, and the cost of the vehicle has not been claimed as a deduction under cash basis accounting.
The rates mean that employers can reimburse their workers claims for business travel at these rates (or below) free of tax and national insurance. These rates are also useful to self-employed individuals, as a deduction can be claimed based on their business mileage without needing to make any adjustment for private use. The business is just required to keep a mileage log of business journeys.
If you regularly use your own vehicle for business journeys, keeping accurate mileage records is essential to ensure you claim the correct tax relief or receive the appropriate reimbursement from your business. While many people still rely on paper records or spreadsheets, dedicated mileage tracking apps can make the process much simpler. We recommend Mileage Monster, a UK-based mileage tracking app that helps drivers record journeys, calculate mileage claims, and maintain organised records throughout the year. By capturing journey details as you travel, the app can save time and reduce the risk of missed claims.
If you need any help using the new mileage rates in your business, please do get in touch. We would be happy to help you!
