The rates
HMRC's approved mileage rates for cars and vans:
- First 10,000 business miles: 45p before 6 April 2026; 55p from 6 April 2026, now made permanent.
- Above 10,000 business miles: 25p now; 35p from 6 April 2027.
The government announced the 55p rate as a temporary measure in May 2026. The Budget made it permanent, and names care workers among the 2 million employees and 1 million self-employed people who use their own vehicle for work. It estimates someone driving 6,000 business miles a year will save £120 in tax.
How the rules work
- Tax-free up to the approved amount. Employers can pay Mileage Allowance Payments up to the approved amount without reporting them to HMRC. The approved amount is business miles multiplied by the rate.
- Paying more than the approved amount means reporting the excess and deducting tax.
- National Insurance: for cars and vans, payments of up to 55p for every business mile are exempt.
- Paying less: if an employer pays less than the approved rate, the worker can claim tax relief on the difference. They need records of the dates and mileage of their work journeys. Claims can go back four previous tax years.
- Commuting doesn't count. Travel between home and a permanent workplace isn't business travel. Travel to a temporary place of work can be.
What this means for your service
- Check your policy. If you pay less than 55p a mile, tell staff they may be able to claim tax relief on the difference. If you pay more, make sure the excess goes through payroll.
- High-mileage staff. From April 2027, the 35p rate above 10,000 miles helps staff who drive a lot, such as floating support workers or managers covering several services.
- Keep good records. Business mileage claims need dates and journeys. Make sure your expenses process captures them.
- Fees. If staff mileage is a big cost in your service, include it when you show commissioners your cost of care.
This is general information, not tax advice.
Sources
- HM Treasury, Budget 2026 (28 Oct 2026): https://www.gov.uk/government/publications/budget-2026-document/budget-2026-html (checked 28 Oct 2026)
- HMRC, Expenses and benefits: business travel mileage for employees' own vehicles: https://www.gov.uk/expenses-and-benefits-business-travel-mileage (checked 28 Oct 2026)
- HMRC, Travel: mileage and fuel rates and allowances: https://www.gov.uk/government/publications/rates-and-allowances-travel-mileage-and-fuel-allowances/travel-mileage-and-fuel-rates-and-allowances (checked 28 Oct 2026)
- GOV.UK, Claim tax relief for your job expenses: vehicles you use for work: https://www.gov.uk/tax-relief-for-employees/vehicles-you-use-for-work (checked 28 Oct 2026)
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