Tax Free Mileage rate rises by 10p

Tax Free Mileage rate rises by 10p

In a positive move, the chancellor increased the approved mileage rate for personal car use for business trips, which has been increased for the first time in more than 15 years.

With soaring petrol and diesel prices, the chancellor announced a 10p per mile increase in tax-free mileage rates with the increase backdated to 6 April 2026, ‘benefiting those who need to drive for work, from care workers to plumbers.’

This means an increase from the current 45p for cars and vans to 55p per mile for the first 10,000 business miles in the tax year, and 25p for mileage over 10,000 miles. There will be no change to the motorcycle rate.

HMRC has updated the rates page stating the new approved mileage rates are ‘approved from tax year 2026 to 2027.’

This is the first increase in the approved mileage rate for 15 years with the rate frozen since April 2011.

Confirming the 5p fuel duty freeze announced by the Prime Minister, the Chancellor added: ‘The government has also this week set out additional, targeted support for those businesses most exposed to rising fuel costs.’

For hauliers there will be a 12-month road tax holiday for HGVs, saving the typical heavy lorry up to £912.

To support farmers and the rail freight industry, duty will be cut on red diesel by over a third until the end of this year.

On longer term support for businesses, there was little detail, but the chancellor stressed ‘any support will also need to be carefully targeted at firms most exposed to the crisis.’