Mid-Year Mileage Check: Reviewing Your Business Travel Expenses in August 2026

As we cross the halfway mark of the 2026/27 tax year this August, UK small and medium-sized enterprises (SMEs) face a unique administrative challenge. While many business owners are currently focused on summer holidays or Q3 growth targets, a significant shift in HMRC mileage rules demands immediate attention.

In May 2026, the government announced the first major increase in Approved Mileage Allowance Payments (AMAPs) in over a decade, raising the rate for cars and vans from 45p to 55p per mile. Crucially, this change was made retrospective to 6 April 2026. For businesses that have been reimbursing staff at the old rate all summer, August is the critical "catch-up" month.

Reviewing your business travel expenses now isn't just about compliance; it’s about employee retention, tax efficiency, and ensuring your accounting services uk are working as hard as you are.

The 2026 AMAP Shift: What Has Changed?

For years, the 45p per mile rate was a staple of UK business accounting. However, following sustained pressure regarding rising fuel costs and the cost-of-living index, HMRC finally adjusted the rates for the 2026/27 tax year.

As of August 2026, the rates you should be using are:

• Cars and Vans: 55p per mile for the first 10,000 business miles (up from 45p).

• Cars and Vans (over 10,000 miles): 25p per mile (unchanged).

• Motorcycles: 24p per mile.

• Bicycles: 20p per mile.

• Passenger Allowance: 5p per mile per passenger (for business-related car-sharing).

The retrospective nature of this announcement means that any business mileage logged between April and July may have been "underpaid" if you were sticking to the old 45p limit. If you want to stay competitive and support your team, now is the time to decide how to handle that 10p-per-mile shortfall.

Why a Mid-Year Review is Essential in August

By the time August rolls around, most businesses have accumulated four months of travel data. Waiting until the end of the tax year to reconcile these changes can lead to a "reconciliation nightmare" in March.

1. Correcting the "Retrospective Gap"

Because the 55p rate applies to all travel from 6 April 2026, you have two choices for the travel already logged:

• The Top-Up: You can pay your employees a lump sum "top-up" for the 10p difference for all qualifying miles logged so far. This is generally well-received by staff but requires a careful audit of mileage logs to ensure accuracy.

• The Tax Relief Route: If your business cannot afford a retrospective top-up, you can leave the payments as they were and advise employees that they can claim the tax relief on the 10p difference via their personal tax returns.

Whichever path you choose, communicating this clearly this month prevents confusion later. For a deeper dive into the specifics of these rates, see our guide on HMRC Mileage Rates 2026: Are You Claiming Everything You’re Owed?

2. Identifying "Commuting" vs. "Business Travel"

One of the most common mistakes SMEs make: and one that HMRC is increasingly cracking down on in 2026: is misclassifying home-to-office commuting as business travel. Business travel must be to a "temporary workplace." If your staff have shifted to a hybrid model, the definition of a "permanent workplace" may have changed since your last policy review. August is the perfect time to audit these routes and ensure you aren't accidentally creating a future tax liability.

3. Checking the 10,000-Mile Threshold

For high-mileage employees, the drop from 55p to 25p after 10,000 miles is significant. By August, many "road warriors" may already be approaching the 4,000 or 5,000-mile mark. Identifying these trends now allows you to forecast your travel budget more accurately for the remainder of the year.

The Electric Vehicle (EV) Complication

In 2026, the distinction between AMAP and Advisory Fuel Rates (AFRs) is more important than ever, particularly with the surge in EV adoption.

If your employees use their own electric vehicles for business, they are entitled to the same 55p/25p AMAP rates as petrol or diesel cars. However, if they are using a company EV, the rules are different. HMRC’s Advisory Electricity Rate (AER) has seen its own fluctuations in 2026, reflecting the varying costs of public versus home charging.

If you are currently debating a fleet transition, it is vital to compare accountant services to find a professional who understands the capital allowances and Benefit-in-Kind (BiK) implications of EVs. You might find that switching to a company EV fleet is more tax-efficient than continuing with the 55p mileage reimbursement model. Check out our analysis on Company Cars vs. EVs in 2026: Which Is More Tax-Efficient for Your SME? for more details.

Practical Steps for Your August Mileage Audit

To ensure your business stays compliant and efficient, follow this mid-year checklist:

1. Update Your Expense Software: Most modern cloud accounting platforms have already updated their defaults to 55p, but you should manually verify that your "standard rate" has been adjusted for all claims moving forward.

2. Verify GPS Logs: If you still rely on manual spreadsheets, August is the month to consider moving to a GPS-based tracking app. HMRC is becoming less tolerant of "rounded-up" mileage (e.g., claiming exactly 20 miles for a 17.4-mile trip).

3. Audit the Passenger Allowance: Are your staff car-sharing to client meetings? Many SMEs forget to claim the 5p-per-mile passenger allowance. This is a tax-free way to put extra money in your employees' pockets while encouraging greener travel.

4. Review VAT on Fuel: Remember, if you are VAT-registered, you can claim back the VAT element of the fuel portion of the mileage rate. However, you must have valid fuel receipts to back this up. An August review of your "receipt box" can prevent a frantic search during your next VAT return.

How the Right Accounting Partner Can Help

Navigating mileage rates is only one small part of a larger tax strategy. As your business grows, travel expenses often become one of the top three overheads. Managing these manually is not just time-consuming; it’s risky.

When you look for professional accounting services uk, you should seek an accountant who proactively brings these HMRC changes to your attention. A good accountant doesn't just record what you spent; they tell you how to spend it more efficiently.

If you are still handling your travel expenses in-house or feel your current accountant isn't giving you the proactive advice you need, it might be time to compare accountant services. At Accountant Search, we specialise in matching SMEs with tax professionals who understand the nuances of the 2026 tax landscape, ensuring you never pay more than you owe.

Conclusion

The 10p increase in HMRC mileage rates is a welcome change for employees, but it places an immediate administrative burden on SME owners this August. By taking the time to review your mileage logs, update your reimbursement rates to 55p, and address the retrospective gap now, you can avoid costly errors and keep your workforce happy.

Don't let your travel expenses spin out of control. A mid-year check-up is the best way to ensure your business remains on the right track for a successful, compliant, and tax-efficient 2026.

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