Tax-free mileage rate increases by 10p per mile

The Chancellor of the Exchequer has announced a 10p per mile increase in the tax-free mileage rate that applies to the first 10,000 business miles travelled in a car or van in a tax year.

The increase, which has been backdated to April 2026, means that the rates for the 2026-27 tax year are now as follows:

Cars and vans include electric and hybrid cars and vans as well as those that run on petrol and diesel.

The rates mean that employers can reimburse their workers claims for business travel at these rates (or below) free of tax and national insurance.

These rates are also useful to self-employed individuals, as a deduction can be claimed based on their business mileage without needing to make any adjustment for private use. The business is just required to keep a mileage log of business journeys.

Note that a business can only use these rates if capital allowances have not been claimed on the vehicle, and the cost of the vehicle has not been claimed as a deduction under cash basis accounting.

If you need any help using the rates in your business, please do get in touch. We would be happy to help you

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