Industry News - 11th November 2026
Are you claiming everything you’re entitled to when using your own vehicle for work?
If you use your own car, van, motorcycle or bicycle for business journeys, you may be entitled to mileage payments from your employer.
With HMRC increasing the approved mileage rate for cars and vans from 45p to 55p per mile for the first 10,000 business miles, it’s worth checking that you’re getting the right amount.
Understanding the rules could help employees avoid missing out on valuable tax relief while ensuring employers handle mileage payments correctly.
💷 What are the new mileage rates for 2026/27?
From 6 April 2026, HMRC’s approved mileage rates are:
| Vehicle | Current 2026/27 | From 6th April 2027 |
| Cars and Vans – first 10,000 miles | 55p per mile | 55p per mile |
| Cars and Vans – over 10,000 miles | 25p per mile | 35p per mile |
| Motorcycles | 24p per mile | 24p per mile |
| Bicycles | 20p per mile | 20p per mile |
These rates determine how much an employer can generally pay an employee tax free for the use of their own car on qualifying business journeys.
For cars and vans the increase from 45p to 55p means employees could get an extra £100 tax free for every 1,000 qualifying business miles (within the first 10,000 miles) as compared to the previous rate.
From April 2027, employees travelling more than 10,000 qualifying business miles could also benefit from the higher 35p rate.
The updated rates will also apply to eligible self-employed people who use simplified mileage calculations to work out their allowable business expenses.
🧾 What happens if your employer pays less than the approved rate?
Not all employers will pay the full HMRC approved mileage allowance.
If you get less than the approved amount you may be able to claim Mileage Allowance Relief on the difference.
For example, if you travel 2,000 business miles in your own car and your employer pays 30p per mile:
- HMRC’s approved amount: 2,000 × 55p = £1,100
- Amount received from your employer: 2,000 × 30p = £600
- Difference eligible for tax relief: £500
Importantly this does NOT mean you will get a £500 refund from HMRC. You may be eligible for tax relief on that amount (depending on your circumstances and the rate of income tax you pay).
📊 What if your employer pays more than the approved rate?
Employers are free to pay more than the HMRC approved mileage rate, though anything above the tax free allowance is normally taxable.
The excess must be reported and taxed in line with HMRC’s payroll and reporting requirements.
Separate National Insurance rules do of course apply so employers need to ensure they’re dealing with mileage payments in the correct way.
👥 Can you claim extra for carrying colleagues?
If you’re using your own car or van to take your colleagues on a qualifying business journey, your employer can pay an additional 5p per passenger per business mile tax free.
For instance if you drive 100 business miles with two colleagues who are also travelling for work your employer could pay an additional £10 tax free.
However this payment is optional. If your employer pay less than 5p per passenger mile or nothing at all you cannot claim tax relief on the difference.
🛣️ Which journeys count as business mileage?
✅️ Business travel can be to meet clients, to attend meetings at various locations or to visit a temporary workplace.
❌ Your normal commute between home and your permanent place of work generally wouldn’t qualify.
It’s important to keep accurate mileage records. You need to record the date, destination, reason for the travel and the mileage. This will allow you to support any claims.
⚡ What about the new electric vehicle mileage charge?
The recent Autumn Budget also confirmed plans for a new mileage-based charge for electric and plug-in hybrid cars from 1st April 2028.
The proposed charges are:
📌 Fully electric and hydrogen fuel-cell cars: 3p per mile.
📌 Plug-in hybrid cars: 1.5p per mile.
This new charge, known as Electric Vehicle Excise Duty (eVED), is separate from the mileage allowance rates used for business travel.
It will be based on vehicle mileage rather than just qualifying business journeys and will operate alongside the existing Vehicle Excise Duty system.
Drivers of affected vehicles should keep an eye on further guidance as the introduction date approaches.
💡 Perrigo Perspective
At Perrigo Consultants, we believe employers and employees should understand the mileage rules and apply the correct rates.
For employees, missing out on mileage relief could mean paying more tax than necessary. For employers, using the wrong rates could lead to unnecessary tax or payroll complications.
Our advice would be to check your mileage payments, make sure you’re using the most up to date HMRC rates and that your business journeys are all correctly recorded.
With the increase to 55p per mile now in force it’s also worth a look at the payments made since 6th April 2026.
🔍 Are you claiming the correct mileage relief?
Whether you’re an employee using your own vehicle for work or a business owner managing mileage payments, understanding the rules can help you avoid costly mistakes.
At Perrigo Consultants, we’re here to help you understand your tax obligations, review your expenses, and ensure you claim the relief you’re entitled to.
If you’re unsure whether you’re claiming the correct tax relief for work mileage or need guidance on mileage payments for your employees, contact the Perrigo Consultants team on 01229 488860 or book a FREE discovery call below.
Internet link: You can also check the latest guidance on HMRC’s approved mileage rates, find out how to claim tax relief for using your own vehicle for work and read more about passenger payments on the GOV.UK website.
