HMRC’s Major Mileage Rule Shake-Up Explained

Mileage claims have always been an important area of UK tax relief for employees, company directors, and self-employed individuals. However, recent HMRC updates and growing scrutiny around travel expense claims mean that understanding the latest Mileage rules is now more important than ever.

Many taxpayers assume that claiming Mileage is straightforward, but small mistakes can lead to incorrect claims, lost tax relief, or even HMRC enquiries. The latest changes and clarifications from HMRC are designed to tighten compliance while making it clearer how Approved Mileage Allowance Payments (AMAPs), Mileage Allowance Relief (MAR), and self-employed mileage deductions should work in practice.

In this article, we explain what the latest Mileage rule changes mean and the key considerations business owners and workers should now be aware of.

What Is Mileage Relief?

Mileage relief allows individuals to claim tax relief for qualifying business journeys made using their own vehicle.

For employees, employers may reimburse business Mileage using HMRC’s Approved Mileage Allowance Payments system. If the employer pays less than the approved rate, the employee may be able to claim Mileage Allowance Relief for the difference.

For self-employed individuals, Mileage expenses are usually claimed either using simplified mileage rates or by claiming actual vehicle running costs.

Understanding which system applies is essential because the rules differ depending on employment status and business structure.

HMRC’s New Mileage Rates From April 2026

One of the biggest changes announced in HMRC Agent Update Issue 143 is the increase to approved Mileage rates from April 2026.

The new AMAP rates for cars and vans are now:

• 55p per mile for the first 10,000 business miles increase from 45p per mile
• 25p per mile after 10,000 business miles

For many employees and company directors, this increase could allow larger tax-free reimbursements for qualifying business travel.

Motorcycle and bicycle rates currently remain unchanged at:

• 24p per mile for motorcycles
• 20p per mile for bicycles

These Mileage rates are intended to cover fuel, servicing, insurance, depreciation, and general vehicle running costs.

Importantly, if employers reimburse above the approved Mileage rates, the excess may still become taxable.

Why HMRC Is Tightening Mileage Compliance

One of the major reasons behind the latest Mileage focus is the increasing number of incorrect claims being submitted.

HMRC has identified several common issues, including:

• Personal journeys incorrectly claimed as business Mileage
• Ordinary commuting being treated as allowable travel
• Poor record keeping
• Duplicate claims involving fuel and Mileage together
• Incorrect use of simplified expenses

As digital record keeping becomes more common under wider HMRC modernisation initiatives, Mileage claims are expected to face greater scrutiny going forward.

Mileage Rules for Employees

Employees can usually claim Mileage relief when using their own vehicle for qualifying business journeys.

However, commuting between home and a permanent workplace is normally not allowable for Mileage purposes.

Qualifying business travel may include:

• Travelling to temporary workplaces
• Visiting clients
• Attending meetings
• Business-related site visits

Where an employer pays less than HMRC’s approved Mileage rates, employees may claim Mileage Allowance Relief through their tax return or directly with HMRC.

For example, if an employee travels 5,000 business miles and receives only 35p per mile from their employer, they may potentially claim tax relief on the shortfall between the approved rate and the amount reimbursed.

Mileage Rules for Directors and Limited Companies

Company directors frequently use their personal vehicles for business travel and reclaim Mileage from their company.

In many cases, this remains one of the simplest and most tax-efficient methods because approved Mileage payments are generally allowable for corporation tax and usually tax free personally if kept within HMRC limits.

With the new 55p rate now available from April 2026, directors using their own cars for business journeys may be able to extract slightly more from their company tax efficiently.

However, directors should ensure that proper Mileage logs are maintained. HMRC increasingly expects detailed evidence, including:

• Dates of journeys
• Start and end locations
• Business purpose
• Number of miles travelled

Without sufficient records, HMRC may challenge Mileage claims during a compliance check or enquiry.

Self-Employed Mileage Changes and Considerations

For self-employed individuals, Mileage rules work differently.

Many sole traders use HMRC’s simplified Mileage method instead of claiming actual vehicle expenses. Under this approach, the approved Mileage rates are used instead of separately deducting fuel, repairs, insurance, and depreciation.

The increase to 55p per mile may therefore provide additional tax relief for some businesses using the simplified expenses method.

However, once a vehicle is placed into the simplified Mileage system, switching methods later can be restricted.

This is one of the most important considerations many business owners overlook.

The latest HMRC guidance also reinforces that self-employed Mileage claims must relate wholly and exclusively to business activity. Mixed-use journeys may require apportionment between business and personal use.

Electric Vehicles and Mileage

The rise of electric vehicles has also increased discussion around Mileage claims.

Currently, HMRC applies the same approved Mileage rates to electric vehicles as petrol and diesel vehicles under AMAP rules.

However, separate advisory electricity rates may apply where company vehicles are involved.

As electric vehicle usage continues to grow, further Mileage guidance and possible future changes may emerge.

Record Keeping Is Becoming More Important

One of the biggest themes behind HMRC’s latest Mileage Rules focus is record keeping.

Digital tax systems and increasing HMRC data visibility mean estimated Mileage claims are becoming riskier.

Good practice includes:

• Keeping a Mileage logbook or app
• Recording journeys contemporaneously
• Retaining supporting evidence where possible
• Separating personal and business travel clearly

Accurate Mileage records not only help support claims but can also reduce stress if HMRC ever requests evidence.

Final Thoughts on HMRC’s Mileage Changes

Mileage claims remain an important tax relief for many employees, directors, and self-employed individuals. However, HMRC’s latest increase to Mileage rates, combined with greater compliance focus, means taxpayers should review how they currently claim business travel expenses.

The increase from 45p to 55p per mile for the first 10,000 business miles could provide meaningful additional relief for many business owners and employees from April 2026 onwards.

Whether you are claiming Mileage through a limited company, as an employee, or as a sole trader, reviewing your current approach could help avoid costly mistakes and ensure you are claiming correctly under HMRC’s latest guidance.

If you are unsure whether your current Mileage claims are compliant, obtaining professional advice early can often prevent larger problems later.

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