John Healey, who became Chancellor in July 2026, went into his first Budget promising “everyday fixes”. And so, with Healey’s maiden Budget now out, one of his fixes is good news for anyone who drives for work.
From 6 April 2027, the 55p mileage rate for cars and vans stays in place for the first 10,000 business miles, and the rate for every mile after that rises from 25p to 35p. Motorcycle (24p) and bicycle (20p) rates stay the same.
If you already pay 55p, nothing changes for most of your drivers. The one rate you need to update is the over 10,000 miles band, and it only affects people who drive a lot for work.
The Treasury expects the change to help around 3 million people. It puts the combined tax saving at £120 a year for someone driving 6,000 business miles, and £300 for someone driving 15,000, compared with the rates in place before April 2026.
HMRC mileage rates 2027 at a glance
The only rate that changes on 6 April 2027 is the over 10,000 miles rate for cars and vans.
| Vehicle | 2026/27, first 10,000 miles | 2026/27, over 10,000 miles | From 6 April 2027, first 10,000 miles | From 6 April 2027, over 10,000 miles |
| Cars and vans | 55p | 25p | 55p | 35p |
| Motorcycles | 24p | 24p | 24p | 24p |
| Bicycles | 20p | 20p | 20p | 20p |
The 55p rate is not new, it just stops being temporary
The 55p rate has applied since the start of this tax year. In May 2026, the Government raised the AMAP (Approved Mileage Allowance Payment) rate for cars and vans from 45p to 55p, backdated to 6 April 2026. It was the first increase in 15 years and part of a package to help with rising fuel prices.
That rise only covered the 2026/27 tax year. The 55p rate was due to end on 5 April 2027 and drop back to 45p. The October announcement removes that end date, so 55p carries on into 2027/28 and beyond.
In practice, this means you do not need to change anything for the first 10,000 miles. If you never moved to 55p in the first place, now is a good time to catch up, because your drivers may have been under-claiming since April.
The real change: HMRC mileage rates over 10,000 miles
The HMRC mileage rate over 10,000 miles rises from 25p to 35p on 6 April 2027. The 25p rate has been frozen since 2011, and the change matters most for sales teams, engineers, care workers and anyone else who spends their week on the road.
The 10,000 miles count is per employee, per tax year. Each driver claims 55p a mile until they pass 10,000 business miles, then 35p for every mile after that, until the count resets on 6 April.
Here is what that looks like for someone who drives 15,000 business miles in 2027/28:
| Under the old 25p band | Under the new 35p band | |
| First 10,000 miles at 55p | £5,500 | £5,500 |
| Next 5,000 miles | £1,250 (at 25p) | £1,750 (at 35p) |
| Maximum tax-free payment | £6,750 | £7,250 |
Who the new rates apply to
The same rates cover three groups, and each uses them in a slightly different way.
- Employers paying mileage (AMAPs). You can pay up to the approved rate tax-free when an employee uses their own car, van, motorcycle or bicycle for business travel.
You do not have to pay the full rate, or anything at all. Anything you pay above the rate is taxable and needs reporting. Normal commuting does not count as business travel, which our guide to what you can claim for business mileage covers in detail.
- Employees claiming mileage allowance relief (MAR). If you pay your people less than the approved rate, they can claim tax relief on the difference, either through HMRC or through their Self Assessment return.
For example, an employee who drives 6,000 business miles and receives 30p a mile could get back an extra £300 as a basic rate taxpayer. Employees can make the claim on GOV.UK.
- Self-employed people. Sole traders and partners can use the same flat rates under HMRC’s simplified expenses instead of working out the actual cost of running their vehicle. At 55p, 10,000 qualifying business miles gives a deductible expense of £5,500.
What you need to do before 6 April 2027
Most of the work is a policy check and one rate update. Here is the order we would do it in.
- Check what you pay today. Open your expense policy and confirm you moved to 55p for 2026/27. If you are still paying 45p, decide whether to match the new rate, and tell your drivers they can claim MAR on any shortfall.
- Decide your over 10,000 miles rate. You can pay up to 35p tax-free from 6 April 2027. If you pay less, your high-mileage drivers can claim relief on the gap.
- Update your policy document. Change the rate, the start date and any worked examples. Keep the old rates on file for claims dated before 6 April 2027.
- Update your system. The new rate must apply to journeys made on or after 6 April 2027, not to claims submitted after that date. A March journey claimed in April still gets 25p for miles over 10,000.
- Make sure you track cumulative miles. The 35p band only works if you know when each driver passes 10,000 business miles in the tax year. If you track mileage in spreadsheets, this is the step most likely to go wrong.
- Tell your people. A short note to everyone who drives for work, with the new rates and the date they apply from, saves a lot of questions later.
How Webexpenses keeps your mileage rates current
With Webexpenses, you do not have to track HMRC announcements or change rates by hand. When HMRC rates change, we update them in your account, so claims made from 6 April 2027 use 35p for miles over 10,000.
If you are an existing customer, your account manager can check that HMRC rate updates are switched on for your account and set them up if they are not.
That’s just one part of how our platform handles mileage:
Mileage logged in the app
Your people record journeys in the Webexpenses mobile app, either by entering start and end points or using the built-in tracker. The app calculates the distance from the map, so nobody has to estimate, and round numbers stop creeping into claims.
The 10,000 mile switch handled for you
We count each driver’s business miles across the tax year and apply the lower band once they pass 10,000. This is the part spreadsheets struggle with, and it is the part the 35p change makes more valuable to get right.
Commuting taken out
With offset mileage, claimants can deduct their normal commute while they make the claim, and you can report on what was deducted.
Policy checks before approval
Out-of-policy claims and duplicates are flagged before they reach an approver, with up to six approval levels.
VAT on the fuel portion
Webexpenses works out the VAT you can reclaim on mileage and checks the right receipts are attached. Our guide to reclaiming VAT on mileage explains how the calculation works.
Electric vehicles covered too
You can set separate rates for home and public charging, in line with HMRC’s advisory EV rates. Our auto HMRC rates cover these, too.
Make mileage updates automatic
Once a claim is approved, Webexpenses sends the amounts to your finance team and syncs them with your accounting software, including Netsuite and QuickBooks. You then pay on your own internal schedule.
Mileage tracking, including offset, is part of the Essential plan from £7.50 per active user per month, so you only pay for people who actually submit claims.
The new rates start on 6 April 2027. If you want to stop tracking HMRC changes and mileage thresholds by hand, book a demo and we will show you a claim going from the road to your accounts in a few minutes.
