HMRC Mileage Rate Increases from 45p to 55p Per Mile – What It Means for UK Businesses and Employees
- Even Solutions Accountancy
- Jun 7
- 3 min read
In a significant update for UK taxpayers, HMRC has increased the approved mileage allowance rate for cars and vans from 45p per mile to 55p per mile.
The change comes as welcome news for employees, company directors, and self-employed individuals who use their personal vehicles for business travel, particularly following years of rising fuel prices, insurance premiums, and vehicle running costs.
Why Has the Mileage Rate Increased?
For many years, the HMRC mileage allowance remained fixed at 45p per mile for the first 10,000 business miles. However, with the increasing cost of motoring across the UK, there has been growing pressure on HMRC to review the rate.
The increase to 55p per mile is intended to better reflect real-world motoring expenses, including:
Fuel costs
Insurance
Servicing and maintenance
Vehicle depreciation
Road tax
General inflationary pressures
This change should provide greater financial support for workers and business owners travelling for work purposes.
What Are the New Mileage Rates?
The updated HMRC Approved Mileage Allowance Payments (AMAPs) are now:
Vehicle Type | New Rate |
Cars and Vans | 55p per mile (first 10,000 miles) |
Cars and Vans | 25p per mile (after 10,000 miles) |
Motorcycles | 24p per mile |
Bicycles | 20p per mile |
Who Can Benefit?
The new mileage rate can benefit:
Employees using personal vehicles for work
Company directors travelling for business purposes
Self-employed individuals using simplified mileage expenses
Small business owners reimbursing staff travel costs
It is important to remember that ordinary commuting between home and a permanent workplace is still not allowable for tax relief purposes.
Examples of Mileage Claims
Example 1 – Employee Visiting Clients
An employee travels 150 business miles during the week visiting clients.
Under the old rate:
150 miles × 45p = £67.50
Under the new rate:
150 miles × 55p = £82.50
Additional tax-free reimbursement:
£15 extra
Example 2 – Company Director Travelling to Meetings
A director drives 8,000 business miles during the tax year.
Old allowance:
8,000 × 45p = £3,600
New allowance:
8,000 × 55p = £4,400
Difference:
£800 additional allowable reimbursement
Example 3 – Self-Employed Electrician
A self-employed electrician regularly travels to customer sites using his own van.
Instead of tracking:
Fuel receipts
Repairs
Insurance
Depreciation
He can use the simplified mileage method and now claim 55p per business mile, making record keeping easier and potentially increasing allowable deductions.
What Does This Mean for Employers?
Employers may now choose to reimburse employees up to 55p per mile tax-free for qualifying business journeys.
Benefits for employers include:
Simpler expense administration
More accurate reflection of employee travel costs
Improved staff satisfaction
Reduced disputes over expense reimbursements
However, businesses should also consider the increased reimbursement costs when budgeting for staff travel.
Record Keeping Still Matters
Even with the higher mileage allowance, HMRC still expects accurate records to be maintained.
Businesses and individuals should keep:
Dates of travel
Purpose of the journey
Start and end locations
Number of business miles travelled
Good record keeping remains essential in the event of an HMRC enquiry.
Final Thoughts
The increase from 45p to 55p per mile represents a substantial and positive change for UK taxpayers who rely on their vehicles for work.
With vehicle running costs continuing to rise, the updated allowance should provide more realistic support for employees, directors, and self-employed individuals claiming business mileage.
Businesses should now review their expense policies and ensure payroll and accounting systems are updated to reflect the new HMRC mileage rates.
At Even Solutions, we can help businesses and self-employed individuals understand how the new mileage rules apply to them, ensure claims are processed correctly, and assist with maintaining accurate records in line with HMRC requirements. Whether you need support with bookkeeping, payroll, tax returns, or expense reviews, our team can help ensure you remain compliant while maximising allowable business claims.
Final Thoughts
The increase from 45p to 55p per mile represents a substantial and positive change for UK taxpayers who rely on their vehicles for work.
With vehicle running costs continuing to rise, the updated allowance should provide more realistic support for employees, directors, and self-employed individuals claiming business mileage.
Businesses should now review their expense policies and ensure payroll and accounting systems are updated to reflect the new HMRC mileage rates.
At Even Solutions, we can help businesses and self-employed individuals understand how the new mileage rules apply to them, ensure claims are processed correctly, and assist with maintaining accurate records in line with HMRC requirements. Whether you need support with bookkeeping, payroll, tax returns, or expense reviews, our team can help ensure you remain compliant while maximising allowable business claims.
