In short
The approved mileage allowance payment (AMAP) rate for employees using their own car or van is now 55p a mile for the first 10,000 business miles in 2026/27, up from 45p and backdated to 6 April 2026. Above 10,000 miles it stays at 25p. Employers can top up mileage already paid at 45p tax-free. If you paid more than 45p and taxed the excess, you may need to correct earlier 2026/27 pay runs so tax and National Insurance are refunded.
For the first time since 2011, the tax-free mileage rate for employees using their own car or van has gone up. The change is backdated to the start of the tax year, so any employer that pays mileage through payroll or expenses should check that it has been applied correctly before year-end.
The new approved mileage rates for 2026/27
The approved mileage allowance payment (AMAP) rates from 6 April 2026 are below, according to GOV.UK's travel and mileage rates.
| Vehicle | First 10,000 business miles | Each mile over 10,000 |
|---|---|---|
| Cars and vans | 55p (was 45p) | 25p (unchanged) |
| Motorcycles | 24p | 24p |
| Bicycles | 20p | 20p |
The National Insurance disregard for relevant motoring expenses has also gone up to 55p a mile, and both changes are backdated to 6 April 2026, according to HMRC's August 2026 Employer Bulletin. Passenger payments stay at 5p per passenger per business mile.
If you still pay 45p a mile
You don't have to pay the full rate. AMAPs are the maximum you can pay without tax or National Insurance. But if you want to move to 55p, you can also make a top-up payment for business miles driven since 6 April 2026. It is tax-free as long as total mileage payments for the year stay within the approved amount, according to the Chartered Institute of Payroll Professionals.
The rate depends on when the miles were driven, not when they were paid. So mileage for early April journeys paid in a 2026/27 pay run needs splitting. Miles driven before 6 April stay at 45p.
Example: an employee has claimed 2,000 business miles since 6 April 2026 at 45p (£900). At 55p, the approved amount for those miles is £1,100, so you can pay a £200 top-up with no tax or National Insurance.
If you stay at 45p, employees can claim Mileage Allowance Relief from HMRC on the difference, either online or through Self Assessment.
If you pay more than 45p a mile
Many employers pay above the old rate and put the excess through payroll as taxable pay. With the tax-free limit backdated to 55p, some of that tax and National Insurance may no longer have been due. HMRC says you may need to correct payroll for earlier months of 2026/27 so overpaid tax and both employer and employee Class 1 National Insurance can be refunded, following its guidance to fix problems with running payroll.
Anything you pay above 55p is still taxable earnings and must be taxed through payroll or reported on a P11D, according to GOV.UK's rules for business mileage.
Payroll checklist
- Check the mileage rate set up in your payroll or expenses system is 55p for the first 10,000 miles.
- Run a year-to-date report of business miles since 6 April 2026 for each employee.
- Decide whether to back-pay the extra 10p a mile, and tell staff what you've decided.
- If you paid above 45p and taxed the excess, correct the earlier pay runs and submit corrected figures to HMRC.
- Keep anyone over 10,000 business miles on 25p for the extra miles.
- Update your expenses policy so the new rate is written down.
Also due this month: electronic payments for a PAYE Settlement Agreement for 2025/26 must clear into HMRC's account by 22 October 2026. Use your PSA reference, not your PAYE Accounts Office reference, according to HMRC. All the year's key dates are in our payroll deadlines guide.
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This article is general information based on official sources at the date of publishing, not legal or tax advice. Rules can change, so check the linked guidance or talk to us about your payroll.