10p Extra Per Mile: Why Your 2026 Business Travel Just Got a Whole Lot Cheaper

By Sam

If you’ve been feeling the pinch at the petrol pump lately, we’ve got some absolutely cracking news to brighten your week. As part of the government’s brand-new "Great British Summer Savings" package, the Chancellor has just announced a significant boost to business travel mileage rates.

Starting right now: but reaching all the way back to April 2026: the tax-free mileage allowance has increased by a whopping 10p per mile.

Whether you’re a plumber zig-zagging across London, a consultant visiting clients in the Midlands, or a care worker making your daily rounds, this is a massive win for your pocket. At Accountant Search, we’re all about helping SMEs and the self-employed keep more of what they earn, so let’s dive into what this means for you and how you can claim every penny you’re owed.

What is the "Great British Summer Savings" Announcement?

Announced this week, the "Great British Summer Savings" is a collection of measures designed to ease the cost of living and support small businesses during the busiest travel season of the year. While a lot of the headlines have focused on temporary VAT cuts for family attractions and summer holidays, the 10p mileage increase is the real hero for the UK’s workforce.

Unlike the temporary summer perks, this mileage increase is a permanent shift for the 2026/27 tax year. The best part? It’s backdated to April 6th, 2026. This means if you’ve been keeping your logs since the start of the financial year, you’ve just earned a retroactive bonus on every single business mile you’ve driven so far.

Breaking Down the Numbers: What’s Changed?

For years, the HMRC "Approved Mileage Allowance Payments" (AMAP) stayed relatively static. But with the 2026 update, the government has finally acknowledged the rising costs of maintaining and fueling a vehicle for work.

While we are waiting for the final, full tables to be published by HMRC, the headline is clear: add 10p to the previous rates.

For most car and van drivers, this moves the standard rate from 45p to 55p per mile for the first 10,000 miles. For those of you who drive more than that, or use motorcycles and bicycles, the 10p uplift applies across the board.

Why the "Backdated" Part is a Game Changer

Because the change is backdated to April 2026, you don't just start earning more from today. You can actually "top up" your claims for the last few months.

Imagine you’ve driven 2,000 business miles since April. Under the old rules, that was a £900 tax-free reimbursement. Under the new 55p rate, it’s £1,100. That’s an extra £200 in your pocket just for journeys you’ve already completed! If you're managing your own tax preparation, this is the kind of update that makes your spreadsheet look a lot healthier.

Who Exactly Benefits from the 10p Increase?

This isn't just for big corporations with fleets of cars. In fact, it’s specifically designed to help the "backbone of Britain": the SMEs and the self-employed.

1. Employees Using Their Own Cars

If you work for a company but use your own vehicle for business trips (not your daily commute to the office!), your employer can now pay you 10p more per mile without you having to pay a penny in Income Tax or National Insurance on that money. If your employer doesn't pay the full HMRC rate, you can claim the "Mileage Allowance Relief" on your Tax Return at this higher rate.

2. Small Business Owners (SMEs)

As an employer, you can now offer your team a more competitive travel package. It’s a great way to support your staff during a cost-of-living crisis without increasing their taxable salary. Plus, these reimbursements are a deductible business expense, which helps lower your Corporation Tax bill.

3. The Self-Employed (Simplified Mileage)

If you are a sole trader and use the "simplified expenses" method for your car or van, you simply multiply your business miles by the HMRC rate. This 10p increase means a direct, larger deduction from your taxable income when you file your Self Assessment.

How to Claim Your Extra 10p: A Step-by-Step Guide

With the excitement of extra cash, don't forget that HMRC still loves their paperwork. To make sure you get the full benefit of the Great British Summer Savings, you need to stay organized.

1. Audit Your 2026 Logs: Go back to April 6th, 2026. Total up every business mile you’ve driven. If you haven't been keeping a log, now is the time to start (and perhaps check your Google Maps timeline or calendar to reconstruct the last few months!).

2. Update Your Accounting Software: Whether you use Xero, QuickBooks, or FreeAgent, make sure your mileage settings are updated to reflect the new 55p rate (or whichever rate applies to your vehicle). If you’re unsure which software is best, check out our Xero vs. QuickBooks comparison.

3. Talk to Your Accountant: If you’re an employer, you’ll need to figure out how to pay the backdated 10p to your staff. If you're self-employed, your accountant can ensure this is reflected in your next tax filing. Need help finding a pro? We can match you with a local accountant who knows these 2026 rules inside out.

4. Keep Digital Proof: In 2026, HMRC is stricter than ever with digital record-keeping. Using a mileage tracking app that integrates with your bookkeeping is the smartest move you can make.

The "Soft Landing" and Making Tax Digital (MTD)

It’s important to remember that this mileage update is happening alongside the major rollout of MTD for ITSA (Income Tax Self Assessment). We’ve talked a lot about the MTD 2026 survival guide, and the good news is that the 10p mileage increase actually simplifies things for many.

By using the simplified mileage rate, you avoid the headache of tracking every single petrol receipt, VAT on fuel, and repair bill. You just track the miles, multiply by 55p, and you're done. It’s the ultimate "MTD-friendly" way to manage vehicle costs.

Why This Matters for SME Growth

You might be thinking, "It’s only 10p, Sam. Is it really that big a deal?"

Let's do the math. An SME with five employees, each driving 5,000 business miles a year, is looking at an extra £2,500 in tax-free support. That’s money that stays within the business or goes directly into the pockets of hard-working staff.

In a year where we've seen significant shifts in UK economic policy, these small wins add up. It encourages business owners to get out there, meet clients in person, and expand their reach without fearing the cost of the journey.

Don't Leave Money on the Road

The "Great British Summer Savings" announcement is a rare moment of pure positivity for business owners. But like any tax change, the benefit only goes to those who actually claim it.

If you’re feeling overwhelmed by the backdating, the MTD rules, or just the general chaos of running a business, don't go it alone. At Accountant Search, we specialize in connecting SMEs with accountants who don't just "do the books" but actually help you find these hidden savings.

Whether you need help with online accounting or you're struggling for time to hire an accountant, we’re here to help you navigate the 2026 landscape.

Final Thoughts: Enjoy the Summer!

The sun is out (hopefully!), the mileage rates are up, and your business is moving forward. Take a moment to review your travel logs this weekend. That 10p per mile might just pay for your next team lunch or a well-deserved summer break.

Keep driving, keep growing, and most importantly: keep your receipts (or your digital logs!).

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