HMRC Mileage Allowance Rate Increase

As you may be aware, HMRC recently announced an increase in UK mileage rates for work-related driving.  

Why do I have to pay my drivers in respect of mileage claimed for work related travel?

Employers are not under a legal obligation to reimburse employees at a particular rate in respect of business mileage, but employees may be able to claim tax relief on any shortfall between the approved mileage rate and the level at which their employer reimburses them for the miles driven.

Where employers are reimbursing expenses in respect of work-related travel by car or van, the approved mileage rates for the tax year 2026/2027 are as follows:

• 55p per mile for the first 10,000 miles, reflecting a 10p increase from the previous rate; and 

• The rate of any additional miles in the tax year remains unchanged at 25p per additional mile.

These rates have been backdated to 6 April 2026. 

HMRC’s guidance (Travel — mileage and fuel rates and allowances - GOV.UK) also confirms that employees can claim an additional 5p per passenger per business mile for carrying passengers in the car or van, so long as the work-related journey, is also a work-related  journey for that passenger. 

Should I update our employment documentation?

It would be prudent for employers to identify and amend any specific mileage rate details which are currently set out (most likely to be referenced within policies dealing with expenses or driving for work) to reflect the revised rates.   

Is there anything else I need to do?

In light of the mileage in respect of the first 10,000 miles being increased, and also backdated to 6 April 2026, employers may wish to revisit work-related mileage claims submitted in respect of mileage incurred since 6 April 2026 with a view to reimbursing drivers accordingly. However, there is no obligation upon employers to do so and the new rate can be adopted and applied only for work-related claims going forward. 

If you would like any further information on this article or would like to discuss your employment law and HR matters, please don’t hesitate to contact at hello@alphr.uk and we will be delighted to help you.