Milometry45p held for fifteen years, then moved to 55p
The rate was set when petrol was cheaper and cars were thirstier. It outlasted three prime ministers and a great deal of inflation before it finally gave.
Algemene informatie, geen advies. Geschreven als algemene informatie en voor zover wij weten juist op 27 september 2026. Belastingregels veranderen, en hoe ze uitpakken hangt af van je eigen situatie. Dit is geen belasting-, juridisch of financieel advies: vraag een accountant, een belastingadviseur of de Belastingdienst voordat je erop vertrouwt.
The approved mileage rate for cars and vans went to 45p a mile for the first 10,000 business miles from 6 April 2011, up from 40p. The 25p rate above 10,000 miles has been unchanged for considerably longer.
It then did not move for fifteen years. In May 2026 the government announced a rise to 55p for journeys from 6 April 2026, the first change since 2011. The 25p rate above 10,000 miles stayed where it was, as did the 5p a mile an employer can pay tax free for each colleague carried on a business journey.
This is the story of why it held for so long, and what finally shifted.
What the rate is meant to cover
It is not a fuel reimbursement. The approved rate is intended to cover the whole cost of running your own car for business: fuel, insurance, road tax, servicing, tyres, repairs and depreciation.
That is why it is so much higher than the Advisory Fuel Rates used for company cars, which cover fuel alone because the company already owns the asset.
What has happened since 2011
| 2011 | Now | Direction | |
|---|---|---|---|
| Approved rate, first 10,000 miles | 45p | 55p | Up 22%, in 2026 |
| Rate above 10,000 miles | 25p | 25p | Unchanged |
| Threshold | 10,000 mi | 10,000 mi | Unchanged |
| Insurance, servicing, parts | n/a | Substantially higher | Against the rate |
| New car prices, so depreciation | n/a | Substantially higher | Against the rate |
| Typical fuel economy | n/a | Better | For the rate |
| Electric running costs | Negligible uptake | Very low at home | For the rate |
Which is why the same rate is generous for one driver and thin for another, on identical mileage.
Why it feels less generous than it did
Two things pull in opposite directions.
Against the rate: everything except fuel has risen substantially since 2011. Insurance, parts, labour rates, and the purchase price of cars, which drives depreciation.
For the rate: cars have become considerably more efficient. A 2011 family car doing 40 mpg has a 2026 equivalent doing rather better, and an electric one doing better still on running cost per mile.
For a driver with a modern, efficient, cheaply acquired car, the rate can more than cover what the mile costs. For someone running an older, thirstier or more expensive vehicle, it increasingly is not.
The 10,000-mile cliff
The part that ages least well is the threshold. It has been 10,000 miles for a very long time, and it is not indexed to anything.
A driver doing 20,000 business miles a year is claiming 55p on half of them and 25p on the rest, giving a blended rate of 40p. The rules assume high mileage means lower marginal cost, which is true for fuel and largely untrue for tyres, servicing and depreciation.
What finally changed it
The government announced on 21 May 2026 that the rate would rise to 55p, backdated to 6 April 2026, and legislated it in the Taxation (Energy and Vehicles) Act 2026.
Worth noting what did not change: the 10,000-mile threshold, the 25p rate above it, and the 5p passenger payment. The blended rate for a high-mileage driver therefore improved by less than the headline suggests, and the case for actual costs on a thirsty vehicle has narrowed rather than closed.
What you can do about it
If you are an employee paid less than the approved rate, you can claim tax relief on the difference, worth the difference multiplied by your tax rate. That is Mileage Allowance Relief and it is claimed through Self Assessment or a P87.
If you are self-employed and the flat rate genuinely does not cover your costs (a thirsty van, high mileage, an expensive vehicle), actual costs may give a bigger deduction than simplified expenses. That decision is close to permanent per vehicle, so it is worth doing the arithmetic properly rather than defaulting.
Either way, the first requirement is knowing what your driving actually costs. Log fill-ups with the odometer and the figure stops being a guess.
Sources
- Travel, mileage and fuel rates and allowances (HMRC)
- Increasing mileage rates (HM Treasury and HMRC policy paper)
- Income Tax (Earnings and Pensions) Act 2003, section 230: the approved amount (legislation.gov.uk)
- EIM31240: approved mileage allowance payments, the rates (HMRC manual)
- Simplified expenses: vehicles (HMRC)
- Claim tax relief for your job expenses: vehicles you use for work (HMRC)
- Expenses if you're self-employed: car, van and travel expenses (HMRC)
- Advisory fuel rates (HMRC)
General information for UK drivers, not tax advice. Check the current rate table before claiming.
