For the first time in 15 years, HMRC has changed the Approved Mileage Allowance Payment (AMAP) rate. If you are a director, an employer or self-employed, this directly affects what you can be paid tax-free for business travel — and it is backdated to the start of this tax year, so it covers miles you have already driven.
Here is what changed, what stayed the same, and what to do about it.
The headline: AMAP rises from 45p to 55p.
On 21 May 2026, Chancellor Rachel Reeves confirmed in the House of Commons that the AMAP rate for cars and vans is rising from 45p to 55p per mile for the first 10,000 business miles in a tax year. The change is backdated to 6 April 2026, so it applies to every qualifying mile already driven in the 2026/27 tax year.
The 45p rate had been frozen since 2011, despite the cost of motoring rising steadily over the same period. HMRC has now updated the official figures on the GOV.UK Travel — mileage and fuel rates and allowances page to reflect the new rate.
The full AMAP rates from 6 April 2026
- Cars and vans — first 10,000 miles: 55p per mile (was 45p)
- Cars and vans — over 10,000 miles: 25p per mile (unchanged)
- Motorcycles: 24p per mile (unchanged)
- Bicycles: 20p per mile (unchanged)
- Carrying a passenger on the same business journey: an extra 5p per passenger per mile (unchanged)
So the headline is simple: the first-10,000-mile car rate jumps 10p, from 45p to 55p. Everything else stays where it was.
What this means if you are a limited company director.
If you use your own car for business travel — visiting clients, suppliers, networking, training — your company can now reimburse you 55p per mile for the first 10,000 miles, completely free of Income Tax and National Insurance.
A few quick examples:
- 5,000 business miles a year: £2,750 tax-free (up from £2,250) — an extra £500 out of the company, tax-free.
- 8,000 business miles a year: £4,400 tax-free (up from £3,600) — an extra £800.
- 10,000 business miles a year: £5,500 tax-free (up from £4,500) — an extra £1,000.
For most owner-managed limited companies, this is one of the most efficient ways to take money out of the business: the company gets corporation tax relief on the payment, and there is no personal tax and no National Insurance on it. It is not a loophole — just the rules used correctly.
If you have been claiming 45p out of habit, you are now leaving 10p a mile on the table. On 10,000 miles that is £1,000 a year of tax-free money you are entitled to and not taking.
What if your company has paid 45p so far this year?
Because the rise is backdated to 6 April 2026, any business miles you have already reimbursed at 45p this tax year are now under the approved rate. You have two options:
- Top up the difference. Pay an additional 10p per mile on every qualifying business mile claimed since 6 April 2026, through your usual expense process. This keeps the full amount tax-free.
- Leave it and claim the relief personally. If the company keeps paying 45p, you can claim Mileage Allowance Relief on the 10p shortfall through Self Assessment or form P87. It works, but it is less efficient — updating your reimbursement is the cleaner route.
If you run payroll or expenses through a system such as Xero, update your mileage rate now to avoid drift. We handle this for clients automatically.
Company cars are different — Advisory Fuel Rates apply.
If you drive a company car rather than your own, AMAP does not apply. Instead you use HMRC's Advisory Fuel Rates (AFRs), which are lower, set by engine size and fuel type, and reviewed every quarter. The current rates, in force from 1 June 2026, are:
- Petrol: up to 1400cc — 14p; 1401–2000cc — 17p; over 2000cc — 26p
- Diesel: up to 1600cc — 15p; 1601–2000cc — 17p; over 2000cc — 23p
- LPG: up to 1400cc — 11p; 1401–2000cc — 13p; over 2000cc — 21p
- Fully electric company cars: 7p per mile for home charging, 15p for public charging
These rose for petrol and diesel at the 1 June 2026 review. Because AFRs change every quarter (1 March, 1 June, 1 September and 1 December), always check the current figures on GOV.UK before applying them rather than relying on a rate you set months ago.
A note for trades and contractors.
If you are in construction or a trade and you are constantly on the road between sites, suppliers and jobs, this change matters more to you than to most. Travel to a temporary workplace counts as business mileage, and for many subcontractors that is the bulk of their driving. Alongside the CIS rules we write about a lot, mileage is one of the most commonly under-claimed costs we see when new construction clients come to us.
The two mistakes we see most.
- Mixing up AMAP and AFR. AMAP (55p then 25p) is for your own car used for business. AFR (the pence-per-mile rates above) is for company cars. Using the wrong set is one of the most common findings in an HMRC employer compliance review.
- No mileage log. HMRC expects a contemporaneous record: date, journey, business purpose and miles. A spreadsheet or app is fine — but reconstructing it 18 months later when HMRC asks is not. No log, no claim is the single most common reason a mileage claim gets disallowed.
What to do this week.
If you are a Barton client, we are already flagging this on relevant accounts as part of our regular work. If you are not, here is a quick action list:
- Update your company's mileage reimbursement policy to 55p / 25p.
- Top up any business mileage paid at 45p since 6 April 2026.
- Check your mileage log is up to date — and if you do not have one, start one today.
- If you drive a company car, set a quarterly reminder to check the AFRs on GOV.UK.
The 10p uplift sounds small, but on 10,000 business miles it is £1,000 a year of extra tax-free money out of the company. Worth getting right. If you would like help structuring director travel and expenses efficiently, get in touch for a free quote and we will take a look.
Frequently asked questions
What is the new mileage rate for 2026/27?
For cars and vans it is 55p per mile for the first 10,000 business miles, then 25p after that. The 55p figure rose from 45p and is backdated to 6 April 2026 — the first change since 2011. Motorcycles stay at 24p, bicycles at 20p, and there is an extra 5p per passenger per mile.
Can a company director claim mileage in their own car?
Yes. If you use your own car for business journeys, your company can reimburse you at up to 55p per mile for the first 10,000 miles tax-free, with no National Insurance and no benefit-in-kind. Keep a mileage log. This does not apply to company-owned cars, which use Advisory Fuel Rates.
My company has paid 45p so far this year — what should I do?
Either top up the extra 10p per mile on everything claimed since 6 April 2026, or claim Mileage Allowance Relief on the shortfall personally through Self Assessment or a P87. Topping up the reimbursement is the more efficient option.
What is the difference between AMAP and Advisory Fuel Rates?
AMAP (55p then 25p) is for using your own car. Advisory Fuel Rates are the lower, quarterly pence-per-mile rates for company-owned cars, set by engine size and fuel type. Using the wrong set is a common HMRC compliance finding. The AFRs rose for petrol and diesel from 1 June 2026.
Sources: HMRC / GOV.UK, Travel — mileage and fuel rates and allowances (updated 21 May 2026) and Advisory fuel rates (from 1 June 2026). Rates are correct at the time of writing; always cross-check the current figures on GOV.UK before applying them.