Understanding the Changes to HMRC Mileage Rates Announced in May 2026
- 4 days ago
- 4 min read
Every year, HM Revenue & Customs (HMRC) updates the mileage rates that businesses and employees can claim for using their vehicles for work. These rates affect how much you can claim back for business travel expenses, impacting your tax returns and overall business costs. In May 2026, HMRC announced new mileage rates that bring important changes for business owners and employees alike. Understanding these changes can help you manage your expenses better and ensure compliance with tax rules.
This article breaks down the key updates to the mileage rates, explains what they mean for your business, and offers practical advice on how to adapt. Whether you are a business owner, a self-employed professional, or someone who regularly travels for work, this guide will help you navigate the new rules with confidence.
Image caption: New HMRC mileage rates affect how business travel expenses are calculated.
What Are HMRC Mileage Rates?
HMRC mileage rates are fixed amounts per mile that businesses and employees can claim to cover the costs of using their own vehicles for work purposes. These rates cover fuel, maintenance, insurance, and depreciation. They apply to cars, motorcycles, and bicycles, with different rates for each.
The rates are designed to simplify expense claims and reduce the need for detailed receipts or calculations. Instead of tracking every cost, you multiply the miles driven by the applicable rate to calculate your allowable expense.
Key Changes Announced in May 2026
The May 2026 update introduced several important changes to the mileage rates:
Increased rates for cars and vans: The first 10,000 miles now attract a higher rate of 55p per mile, up from 45p. This increase reflects rising fuel and maintenance costs.
Reduced rate beyond 10,000 miles: For mileage over 10,000 miles, the rate drops to 25p per mile, unchanged from previous years.
Motorcycle rates increased: The rate for motorcycles remains 24p per mile.
Bicycle rates remain the same: The 20p per mile rate for bicycles has not changed.
These changes aim to balance fair compensation for business travel with budget considerations for employers and HMRC.
How These Changes Affect Your Business
Impact on Expense Claims
If you or your employees drive less than 10,000 miles annually for work, you will see a significant increase in the amount you can claim. For example:
Driving 8,000 miles at the new rate of 55p per mile means a claim of £4,400.
Under the old rate of 45p, the claim would have been £3,600.
This means more money back to cover vehicle costs, which can improve cash flow for small businesses and freelancers.
For those driving more than 10,000 miles, the first 10,000 miles are now more valuable, but the remaining miles still use the lower 25p rate. This tiered approach encourages efficient use of vehicles and cost control.
Budgeting and Tax Planning
Businesses should update their travel budgets to reflect the new rates. This is especially important for companies with large fleets or many employees who travel regularly. Accurate budgeting helps avoid surprises during tax season and ensures that expense claims are maximised without exceeding HMRC limits.
Record-Keeping Requirements
Despite the simplified rates, HMRC requires accurate mileage records. This includes:
Date of travel
Purpose of the journey
Start and end locations
Miles traveled
Maintaining clear records supports your claims and protects against audits. Many businesses use mileage tracking apps or software to automate this process.
Image caption: Keeping detailed mileage records helps businesses comply with HMRC rules.
Practical Tips for Adapting to the New Mileage Rates
Review Your Current Mileage Claims
Start by analysing your recent mileage claims. Compare the amounts claimed under the old rates with what you can claim now. This will help you identify potential savings or adjustments needed.
Communicate Changes to Employees
If you have employees who claim mileage, inform them about the new rates. Clear communication prevents confusion and ensures everyone understands how to calculate their expenses correctly.
Use Technology to Track Mileage
Consider using GPS-based mileage tracking apps. These tools automatically record journeys, reducing errors and saving time. They also generate reports that meet HMRC’s record-keeping standards.
Consult with Accountants for Compliance
Working with ACCA-registered accountants or public practice accountants can help you navigate the changes smoothly. They can advise on the best ways to document mileage, optimise claims, and stay compliant with tax laws.
If you need help, an Accountant Search service can connect you with professionals who match your business needs. You can find an accountant who understands your industry and can support your financial planning.
Examples of Mileage Claims Under New Rates
Example 1: A self-employed consultant drives 7,500 miles annually for client visits. At 60p per mile, the claim is £4,125.
Example 2: A sales manager drives 12,000 miles. The first 10,000 miles at 60p equals £5,500, plus 2,000 miles at 25p equals £500, totalling £6,000.
Example 3: A delivery rider uses a motorcycle for 5,000 miles. At 20p per mile, the claim is £1,000.
These examples show how the new rates can increase allowable expenses and reduce out-of-pocket costs.
When to Seek Professional Help
If your business has complex travel arrangements or you want to ensure full compliance, consulting with public practice accountants is wise. They can help you:
Set up mileage policies
Train staff on record-keeping
Review claims before submission
Advise on tax-efficient travel strategies
Using an Accountant Search platform can help you find an accountant with the right expertise quickly.
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