If you use your own vehicle for business travel you may be entitled to tax relief to help with the cost of owning and running your vehicle. The mileage allowance is the maximum tax-free amount you can be repaid by your employer, or by your business if you are self-employed. The Government has increased the mileage allowance for cars and vans by 10p per mile from 45p to 55p per mile for the first 10,000 miles in the tax year. This equates to a maximum of £5,500 (previously £4,500) that your company or your employer can pay you for the first 10,000 miles without incurring national insurance or income tax. The rate for any mileage over 10,000 remains at 25p per mile.

You can claim the mileage allowance every time you drive somewhere for work in your own vehicle, for example to visit a customer, attend a meeting, or see a supplier but it cannot be claimed for ordinary commuting to and from your place of work. An additional 5p per mile can be paid per passenger, provided that the journey is also business travel for the passenger.

This change, which has been back dated to apply for journeys made on or after 6 April 2026, is the first increase to the mileage allowance since 2011. The increase only applies for cars and vans; the rates for motorcycles and bicycles remain unchanged.

Approved mileage rates 2026-27

If your employer pays you less than the approved mileage rate, you can reclaim tax on the difference. If you are self-employed you can use the rates as part of the simplified expenses claim on your tax return instead of having to calculate the exact running costs of your vehicle.