Chancellor Rachel Reeves has confirmed a 10p per mile increase in the Approved Mileage Allowance Payment (AMAP) for drivers using their own cars or vans for work. The change, announced by HMRC, raises the rate from 45p to 55p per mile for the first 10,000 business miles driven in a tax year, backdated to April 2026.
What the Change Means for Drivers
Under HMRC rules, employees who drive their own vehicles for work (e.g., care workers visiting clients) can receive mileage payments from their employer tax-free and National Insurance-free up to the approved rate. The previous rate of 45p per mile had been frozen since 2011. The new rate of 55p per mile applies from the start of the 2026-27 tax year.
Martin Lewis, the BBC Radio Five Live personal finance expert, championed the change during a conversation with Adrian Chiles. He described it as "the big one that I think is going to be under-covered, but is actually really important."
How to Claim Tax Relief
Lewis explained that if an employer pays less than the approved mileage allowance, employees can claim tax relief on the difference. For example, if an employer pays 30p per mile, the employee can claim tax back on the remaining 25p per mile. If the employer pays nothing, the employee can claim tax relief on the full 55p per mile. Self-employed individuals can also claim the full 55p per mile for business driving.
"This has long been a complaint I've got, so I think the change from 45p a mile to 55p a mile backdated to April 2026, so backdated a couple of months, is really going to be quite useful for people," Lewis said. He noted that the higher rate only applies to the first 10,000 miles; after that, a lower rate applies.
Impact on Workers
The increase is expected to benefit millions of workers who drive for work, particularly those in sectors like social care, sales, and delivery services. According to HMRC, the change reflects rising fuel and vehicle costs. The Treasury estimates that the average driver covering 10,000 business miles per year will save approximately £1,000 in tax and National Insurance compared to the previous rate.
