MilometryBudget 2026: 55p is now permanent and the rate above 10,000 miles goes to 35p
The Budget kept the 55p approved mileage rate and lifts the rate above 10,000 business miles from 25p to 35p from 6 April 2027. What changes, when, who it reaches, and what it does not do.
General information, not advice. Written as general information and correct as far as we know on 31 October 2026. Tax rules change, and how they apply depends on your own circumstances. This is not tax, legal or financial advice: check with an accountant, a tax adviser or HMRC before you rely on it.
The approved mileage rate went fifteen years without moving, and has now moved twice in a year. The 55p rate for the first 10,000 business miles, which the government had described as temporary, is being made permanent. And the rate above 10,000 miles, which has been 25p for as long as most people have been claiming, rises to 35p from 6 April 2027.
The Treasury trailed the change on 26 October and confirmed it in the Budget two days later. It says around three million employees and self-employed people use their own vehicle for work and stand to benefit.
What changes, and when
| Tax year | First 10,000 business miles | Above 10,000 business miles |
|---|---|---|
| 2011/12 to 2025/26 | 45p | 25p |
| 2026/27 (now) | 55p | 25p |
| 2027/28 onwards | 55p | 35p |
Two details matter. The 25p rate still applies until 5 April 2027, so nothing about a claim for the current tax year changes. And the new rate is not law yet: the government says it will be made by statutory instrument later in the year.
The Budget documents name Approved Mileage Allowance Payments and the Simplified Mileage Rates used by the self-employed, along with the matching National Insurance disregard. They say nothing about the motorcycle, bicycle or passenger rates, so assume those stay put until the regulations say otherwise.
What it means in pounds
The Treasury's examples are 6,000 business miles a year saving up to £120, and 15,000 saving up to £300. Both compare with the old 45p and 25p rates, and both are the tax on the extra approved amount at the basic rate:
| Business miles a year | Approved amount at 45p/25p | Approved amount from April 2027 | Difference | At 20% tax |
|---|---|---|---|---|
| 6,000 | £2,700 | £3,300 | £600 | £120 |
| 15,000 | £5,750 | £7,250 | £1,500 | £300 |
The difference is the amount approved, not money arriving in your account. Who gains depends on how you are paid.
Employees
The approved rate is a ceiling on what your employer can pay you tax free, not an amount it has to pay. Your employer does not have to raise anything. If it pays the full rate, the higher figure reaches you as a tax free payment. If it pays less, the gap between what it pays and the approved amount is what Mileage Allowance Relief is measured against, and that relief is worth the tax on the gap, not the gap itself.
So an employee above 10,000 miles who is paid 25p today should expect a wider gap from April 2027 if the employer stands still, and a bigger claim to make for it.
The self-employed
If you use simplified expenses for a car or van, the mileage rate is what you deduct from your profits in place of your actual running costs. The higher rate above 10,000 miles lowers your taxable profit from 2027/28. Whether simplified or actual costs comes out ahead may shift for high mileage drivers, so it is worth running both.
Fuel duty, and what comes after it
The same Budget cancelled the plan to start adding the 5p back on to fuel duty from January 2027. The cut now runs to 30 June 2027, and on 1 July 2027 rates return to their pre-cut level, uprated by RPI. That is a step change rather than a gradual one, and worth pencilling in if you budget for fuel.
For electric and plug-in hybrid drivers, the Budget also confirmed Electric Vehicle Excise Duty from 1 April 2028:
- 3p a mile for battery electric and hydrogen vehicles, 1.5p a mile for plug-in hybrids.
- Rising with CPI from 2029/30.
- You give an odometer reading and an estimate of the coming year's mileage when you renew, and the government plans a mileage estimation tool at launch.
- An "eVED Connect" option is planned so that connected cars can report mileage without you doing it, with automated refunds by 2030.
What to do now
Nothing changes for this tax year, so keep claiming at 55p and 25p. What has changed is what a business mile above the 10,000 line is worth from April, which makes it more useful to know where you will land. Milometry tracks your running total against that line, so the band a journey falls in is a fact rather than a guess at year end.
Sources
- Budget 2026 (HM Treasury)
- Budget 2026: Overview of tax legislation and rates (HM Treasury and HMRC)
- Everyday fixes to make life easier for millions of Britons (HM Treasury)
- Travel, mileage and fuel rates and allowances (HMRC)
General information, not legal or tax advice. The 35p rate takes effect through regulations that have not yet been made: check GOV.UK for the final position.
