Increase to 55p per mile
The Government has decided to increase the Approved Mileage Allowance Payment (“AMAP”) rate from 45p to 55p per mile for the first 10,000 business miles. This marks the first substantive uplift in more than a decade. The previous 45p rate had remained unchanged since 2011, despite sustained increases in fuel prices, insurance costs, vehicle maintenance expenses and general inflationary pressures. This affected employees who use their own vehicles for work purposes.
Applies from April 2026
The revised rate applies retrospectively with effect from 6 April 2026 and is intended to better reflect the true cost of business travel undertaken by employees. You should now review and update your mileage and expenses policies promptly to ensure payroll systems, reimbursement processes and employee communications accurately reflect the new statutory position. You may also need to consider whether backdated payments are required for mileage already reimbursed since 6 April 2026.
Beware of reimbursing more generously
You may wish to consider reimbursing mileage at rates above the Government-approved thresholds in response to continuing increases in motoring costs. But consider the wider issues first. Any reimbursement exceeding the approved AMAP rates may create a taxable benefit in kind, potentially resulting in additional tax and National Insurance liabilities for both employer and employee. For that reason, increasing mileage reimbursement above the approved rates is not always the most commercially or tax-efficient solution.
Consider practical alternative options
Where employee travel costs continue to rise, you may instead wish to explore alternative measures to reduce unnecessary travel expenditure. Practical options include adopting more flexible and agile working arrangements. These could be: using remote meetings, encouraging greater use of public transport, and promoting car-sharing initiatives. These ideas may not only reduce costs but also support wider sustainability and employee wellbeing objectives.
Further reading
Travel mileage and fuel rates and allowances – Gov.uk
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