AMAP Mileage Rates Rise to 55p: What Employees and the Self-Employed Need to Know

AMAP Rate Rises to 55p Per Mile: First Change in 15 Years

On 21 May 2026, the Chancellor announced that the Approved Mileage Allowance Payment (AMAP) rate will increase from 45p to 55p per mile for the first 10,000 business miles travelled by employees using their own car or van. Crucially, the change is backdated to 6 April 2026 — meaning employees are already owed the additional 10p per mile on every qualifying business journey made since the start of the 2026-27 tax year.

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What Are AMAP Rates?

AMAP rates are the HMRC-approved amounts that employers can reimburse employees, tax-free, when they use their own vehicles for business travel. If an employer pays less than the approved rate, employees can claim the shortfall as Mileage Allowance Relief (MAR) against their income tax.

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The New Rates at a Glance (from 6 April 2026)

Vehicle	First 10,000 miles	Over 10,000 miles
Cars & vans	55p (was 45p)	25p (unchanged)
Motorcycles	24p (unchanged)	24p (unchanged)
Bicycles	20p (unchanged)	20p (unchanged)
Passenger rate	5p per passenger per mile (unchanged)	n/a

Note on National Insurance: For NIC purposes, the 55p rate applies to all business mileage — not just the first 10,000 miles — replacing the previous 45p threshold.

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The Retrospective Element: Act Now

Because the increase is backdated to 6 April 2026, there is a gap between the start of the tax year and the announcement date of 21 May 2026 during which employees will have been reimbursed at the old 45p rate.

What employees should do:

• Review all mileage claims made since 6 April 2026.
• Calculate the additional 10p per mile owed on those journeys.
• Ask your employer to pay the top-up reimbursement — it is tax-free up to the 55p AMAP rate.
• If your employer does not top up, you can claim Mileage Allowance Relief on the shortfall through your Self Assessment tax return.

What employers should do:

• Review all mileage payments made to employees since 6 April 2026.
• Pay the backdated 10p per mile top-up — this can be done through payroll or as a separate expense payment.
• Update your expenses policy and mileage claim forms to reflect the new 55p rate going forward.

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What This Means for Employees

For an employee driving 10,000 business miles in 2026-27, the new rate means an extra £1,000 of tax-free reimbursement compared to the previous rate. If your employer reimburses you at less than 55p per mile, you are entitled to claim the difference as a tax deduction.

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What This Means for Employers

Employers who have been reimbursing at 45p per mile are not automatically liable for the difference — but paying the top-up ensures employees are properly compensated and avoids any potential underpayment relief claims. Payments above 55p per mile will be treated as a taxable benefit.

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What This Means for the Self-Employed

HMRC has applied the same increase to the Simplified Expenses rules for sole traders and partnerships. For 2026-27:

• Cars and goods vehicles: 55p per mile for the first 10,000 miles; 25p per mile thereafter.
• Motorcycles: 24p per mile (unchanged).

For those with an accounting period that does not align with the tax year, profits must be calculated using the mileage rates applicable to each relevant tax year.

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Why Has the Rate Increased?

The government stated the increase was made "in recognition of the pressures facing drivers as a result of the effects of the Iran war."

However, tax professionals note the increase still falls short of fully compensating for cost increases since 2011. The Association of Taxation Technicians (ATT) pointed out that had the rate kept pace with inflation, it would now stand at 68p per mile. The ATT has called for the new rate to be kept under regular review.

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What Happens to the 25p Rate?

The rate for business miles over 10,000 per year remains at 25p — a point of criticism from the ATT, noting that high-mileage employees are often under the greatest financial pressure from rising motoring costs.

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Key Action Points

• Employees: Review mileage claims from 6 April 2026 onwards and claim the backdated 10p per mile top-up from your employer — or via Mileage Allowance Relief on Self Assessment.
• Employers: Pay the backdated top-up for April and May 2026 journeys and update your mileage reimbursement policy to 55p per mile.
• Self-employed: Update your mileage records and accounting software to reflect the new 55p rate from 6 April 2026.
• Payroll teams: Ensure NIC calculations reflect the new 55p rate for all business mileage regardless of total miles driven.

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Need Advice?

If you have questions about employee mileage allowances, business travel tax relief, or how the new AMAP rates affect your business or personal tax position, contact Newshams Tax Advisers for specialist, independent advice.