Mileage allowance rates for 2026/27 and 2027/28
By Oakridge Accounting · Updated 4 min readFigures for 2026/27 and 2027/28
The short answer
- Cars and vans: 55p a mile for the first 10,000 business miles in the tax year. This has applied since 6 April 2026, and the Budget in October 2026 made it permanent.
- Above 10,000 miles the rate is 25p now, rising to 35p for miles driven from 6 April 2027.
- Motorcycles are 24p a mile and bicycles 20p. No change has been announced.
- The 10,000 miles are counted across the whole tax year, 6 April to 5 April, not per journey or per claim.
- A company car is different: only the fuel is reimbursed, at HMRC's advisory fuel rates.
The rates
| Vehicle | 2026/27 | From 6 April 2027 |
|---|---|---|
| Car or van, first 10,000 miles | 55p | 55p |
| Car or van, over 10,000 miles | 25p | 35p |
| Motorcycle | 24p | 24p (no change announced) |
| Bicycle | 20p | 20p (no change announced) |
The 55p rate was first announced as temporary in May 2026. The Budget on 28 October 2026 made it permanent and raised the rate above 10,000 miles from 25p to 35p from 6 April 2027. The change has still to pass into law in the Finance Bill.
How the 10,000 miles work
The 10,000-mile line is counted across the tax year, from 6 April to the following 5 April, for all your business journeys in that vehicle type. Miles driven before and after the line in the same journey are split between the two rates.
For example, if you drive 12,000 business miles in 2027/28, the first 10,000 are paid at 55p (£5,500) and the other 2,000 at 35p (£700), £6,200 in all. At the old 25p rate the total would have been £6,000. Your count starts again from zero on 6 April.
Who can claim
- Employees using their own car or van for work can be paid the approved rate by their employer tax-free. If the employer pays less, the employee can claim tax relief on the difference.
- Directors of limited companies are treated in the same way: the company can pay you the approved rate for business journeys in your own car.
- Sole traders can usually use the approved rates as a simple alternative to claiming actual vehicle costs. Check with us before switching method, because the choice normally has to stay for the life of the vehicle.
The approved rate covers fuel and running costs, so you can't claim fuel separately for the same journeys. Normal commuting isn't a business journey.
VAT on the fuel
If a VAT-registered business pays mileage allowance, it can usually reclaim VAT on the fuel part of the payment. That's worked out from HMRC's advisory fuel rates, not from the full mileage rate. Businesses on the Flat Rate Scheme have no VAT to reclaim on fuel.
Company cars
If the car belongs to the company, the approved mileage rate doesn't apply. The company only reimburses the fuel, at HMRC's advisory fuel rate for that fuel type and engine size, because it already bears the wear and tear.
How we handle it
With our mileage claims service you enter your journeys by postcode. We apply the rate in force on each journey's date, count the 10,000 miles across the tax year, work out any VAT on the fuel and post the claim to your books.
Questions people ask
Does the 35p rate apply to the whole year?
No. It applies to miles above 10,000 that you drive on or after 6 April 2027. Your first 10,000 miles in 2027/28 are still paid at 55p.
Did 55p apply before 6 April 2026?
No. Before that date the rate for the first 10,000 miles was 45p.
Can I claim mileage and fuel as well?
Not for the same journeys. The approved rate already covers fuel and running costs.
This guide is general information, not advice for your situation. Tax rules change and the right answer depends on your circumstances, so speak to us (or another qualified adviser) before acting on it.