From April 2026, the approved rate for using a personal vehicle for business has increased from 45p to 55p per mile for the first 10,000 miles, with the 25p rate thereafter unchanged. The previous rate has remained frozen since 2011, despite rising fuel and running costs.
For employers, the position is clear.
Reimbursement of up to 55p per mile can now be made without triggering tax or National Insurance, with any excess remaining taxable. Employees should also be aware that where they are reimbursed at less than 55p per mile, tax relief can be claimed on the shortfall. This is often overlooked, leaving individuals to absorb costs that could be recovered.
It is important to note that this rate does not apply to company cars. These fall under HMRC’s Advisory Fuel Rates, which are reviewed quarterly and vary by fuel type and engine size. For electric company cars, the rate typically remains around 7p per mile for home charging.
Sean Farnell, Partner at Burgis & Bullock: “Although the increase is welcome, it still falls short in real terms. Adjusted for inflation, 45p in 2011 would be around 80p today, with the cost of goods and services rising by 77.7%.
“However, the change provides a useful opportunity for businesses to review their mileage policies. Many have not evolved to reflect hybrid working patterns, shifting travel needs or the move towards electric vehicles.”
Ensuring policies remain appropriate, fair and well-documented is key. While the increase to 55p is positive, it should be seen as a prompt to reassess underlying processes, rather than a complete solution.
If you have any queries, please contact your local Burgis & Bullock office on 0345 177 5500 or www.burgisbullock.com/contact-us/
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