For fifteen years the answer to “what can I claim for using my own car for work” was 45p a mile. The rate was set in 2011 and it stayed there through every rise in the price of fuel since. On 21 May 2026 the government finally moved it. The approved rate for cars and vans is now 55p a mile for the first 10,000 business miles in a tax year, and the change was backdated to 6 April 2026, so it covers the whole of the current tax year.
That is a sizeable increase, it applies to more people than you might think, and quite a few of them have been claiming or being paid at the old rate for six months. Here is what changed, who it helps, and what to do about the miles already driven.
The new rates
| Vehicle | First 10,000 business miles in the tax year | Every mile after that |
|---|---|---|
| Car or van | 55p (was 45p) | 25p (unchanged) |
| Motorcycle | 24p (unchanged) | 24p |
| Bicycle | 20p (unchanged) | 20p |
Two details are easy to miss. The 10,000 mile line is counted across the whole tax year, 6 April to 5 April, and across every vehicle you use, not per car. And the 55p applies whatever the car runs on. Petrol, diesel, hybrid and fully electric all get the same rate.
You can also claim an extra 5p a mile for each colleague you carry as a passenger on a business journey. That figure has not changed.
Who this applies to
The rate does two separate jobs, and most of our clients are on one side or the other.
If you are a sole trader using your own car for the business, the 55p is the flat rate you can use instead of adding up fuel, insurance, servicing and repairs and working out the business share. HMRC calls this simplified expenses. Pick the flat rate for a vehicle and you stay on it for as long as you use that vehicle in the business, so it is a choice to make once rather than every year. You cannot use it for a vehicle you have already claimed capital allowances on.
If you are a company director driving your own car on company business, the company can pay you 55p a mile free of Income Tax and National Insurance, with nothing to report to HMRC. The company gets Corporation Tax relief on the payment. It is one of the cleanest ways of taking money out of a company, because it is a genuine expense rather than salary or dividend.
This is for your own car, not a company car. If the company owns the vehicle, a different set of rules applies and the 55p is not one of them.
What it is worth
Take someone who drives 8,000 business miles a year, which is a realistic figure for a tradesperson or a consultant who visits clients.
| At 45p | At 55p | Difference | |
|---|---|---|---|
| Claim for 8,000 miles | £3,600 | £4,400 | £800 |
For a sole trader paying basic rate Income Tax and Class 4 National Insurance, that extra £800 of expenses saves roughly £208 of tax. For a director, it is £800 more that the company can hand over tax free instead of paying it out as a taxed dividend.
Drive 20,000 business miles and the gain is still £1,000, because only the first 10,000 miles moved. The 25p rate for the rest is exactly where it was.
If you have been paid 45p since April
Because the increase was backdated to 6 April 2026, every business mile driven this tax year counts at the new rate. That leaves three groups with something to do.
Directors paid by their own company at 45p. The company can simply pay a top-up of 10p for every business mile since 6 April. It is still within the approved amount, so it is still tax free. Work it out from the mileage log, pay it, and record it like any other expense claim.
Employees whose employer has stayed at 45p. An employer does not have to pay the new rate. Plenty will not, or will take months to notice. If yours pays you less than 55p for the first 10,000 miles, you can claim tax relief on the difference yourself. For most employees that is a form P87 to HMRC, or a line on your Self Assessment return if you already complete one. The relief is on the gap, so 10p a mile, and you get back the tax on it rather than the 10p itself.
Sole traders who have already filed. If you have filed your 2025 to 2026 return, nothing changes, because that year was at 45p. The new rate first appears on the 2026 to 2027 return, which you will file after April 2027. If you keep your own records in software, check the mileage rate it is using before you trust the number.
The one thing HMRC always asks for
A mileage claim is only as good as the log behind it. HMRC does not accept “about 150 miles a week” if it ever looks. It wants, for each business journey, the date, where you went, why you went, and the miles.
That sounds tedious and it used to be. It is not any more. A free app on your phone, or the mileage feature in Xero, records the trip as you make it, and the claim at the end of the month takes seconds. If you are a client of ours and you are not using one, we will set it up with you.
Two journeys never count, however often people try to claim them. Driving from home to your normal place of work is commuting, not business travel, and that is true for a director with an office as much as for an employee. And the trip to the supermarket on the way back from a client is personal, even if the client was real.
Worth a look if you were on the fence about a company car
The gap between a company car and your own car paid at 55p has widened. A company car for a director means a benefit in kind on the list price every year, and from April 2027 that benefit gets reported through the payroll every pay day rather than once a year on a P11D. Our guide to payrolling benefits in kind explains that change. For a director doing a normal amount of business driving in a petrol or diesel car, keeping it in their own name and claiming 55p is now the better answer more often than it was. Electric cars with a low benefit charge are the main exception, and the sums are worth running rather than assuming.
We check the rate so you do not have to
A change like this, announced in May, backdated to April and buried in a fuel price package, is exactly the kind of thing a client should hear about from their accountant rather than from a forum six months later. We tell our clients when a rate moves, check that their software and their expense claims are using the right figure, and make sure the top-up gets paid where one is due.
Our Sole Trader service is £62.50 per month, fixed, and includes the bookkeeping check, the return and the advice. Ltd Company Starter is from £105 per month, and Growing Strong, for companies wanting more planning through the year, is from £205 per month. There is no charge for ringing to ask whether a journey counts.
If you would like someone to tell you about the next change before it costs you anything, Get your instant quote and see your fixed monthly fee in under a minute.