The UK Government has confirmed an increase to Approved Mileage Allowance Payments (AMAPs), Mileage Allowance Relief (MAR) and self-employed mileage rates, marking the first revision to these statutory business travel rates in over 15 years. Announced by Chancellor Rachel Reeves, the updated framework will apply retrospectively from 6 April 2026 for the 2026–27 tax year and will impact payroll, expense reimbursement and personal tax relief processes for employees and self-employed individuals.
Overview of the Update
The revised mileage rates form part of the UK’s statutory framework for reimbursing and claiming tax relief on business travel undertaken in privately owned vehicles.
The update applies to:
- Approved Mileage Allowance Payments (AMAPs), used by employers to reimburse employees tax efficiently
- Mileage Allowance Relief (MAR), used by employees to claim tax relief where reimbursement is below the approved rate
- Simplified expenses for self-employed individuals claiming business mileage
The rates had remained unchanged since 2011, making this a significant adjustment to long-standing HMRC practice.
Updated Approved Mileage Allowance Rates
From 6 April 2026, the following HMRC-approved rates will apply:
- 55p per mile for the first 10,000 business miles in a tax year
- 25p per mile for each business mile over 10,000
The tiered structure remains unchanged, with the increase applied only to the first mileage threshold.
Backdated Application from 6 April 2026
The revised rates will apply retrospectively from the start of the 2026–27 tax year. This means all eligible business mileage from 6 April 2026 falls within scope of the updated AMAP framework, regardless of when reimbursement or claims are processed.
For employers, this introduces a requirement to assess whether mileage already processed during the tax year requires review to ensure alignment with the updated statutory rates.
Payroll and Employer Compliance Considerations
Employers should review existing mileage reimbursement arrangements to ensure they remain aligned with the revised AMAP structure. Where mileage has been reimbursed at lower rates, organisations may need to consider:
- Reviewing payroll and expense data from 6 April 2026 onwards
- Identifying variances against the revised 55p per mile rate
- Assessing whether retrospective adjustments are required
- Updating expense policies, payroll controls and system configurations
- Ensuring consistent application across employee groups and business units
Given the backdated nature of the change, payroll, HR and finance teams will need to coordinate to determine the appropriate treatment of any underpayments within the tax year.
Employee Mileage Claims and Tax Relief
Where employees receive reimbursement below the revised AMAP rate, they may be eligible to claim Mileage Allowance Relief (MAR) from HMRC for the difference, subject to eligibility conditions.
HMRC is in the process of updating its job expenses tax relief processes to reflect the revised mileage rates. Updated claim forms are expected to support submissions for the 2026–27 tax year.
Maintaining accurate mileage records will remain essential to support claims and ensure compliance with HMRC requirements.
Self Employed Mileage and Reporting Implications
Self-employed individuals will apply the revised mileage rates when completing their 2026–27 Self-Assessment tax returns.
Key filing deadlines remain:
- 31 October 2027 for paper returns
- 31 January 2028 for online returns
The updated rates will impact deductible business travel expenses and may reduce taxable profits for individuals with significant business mileage.
HMRC’s Business Income Manual guidance on expenditure on motor vehicles is scheduled for update on 21 May 2026 to reflect the revised framework.
Global Mobility and Workforce Considerations
For organisations managing internationally mobile employees, the change reinforces the importance of consistent governance across travel and expense policies. While AMAPs apply specifically to UK tax treatment, employers should ensure UK policy updates are aligned with broader global mobility frameworks to support compliance and consistency across jurisdictions.
How activpayroll Can Help
activpayroll supports organisations in managing payroll compliance and global mobility tax obligations across evolving regulatory frameworks. In relation to the updated AMAP, MAR and self-employed mileage rates, we can support with:
- Reviewing and updating payroll and expense reimbursement policies
- Assessing retrospective mileage reimbursement exposure from 6 April 2026
- Ensuring correct application of AMAPs and MAR within payroll processes
- Advising on global mobility and cross-border workforce implications
For further guidance on implementing these changes, please complete our Contact Us form and a member of our expert team will be happy to assist.