The Government has announced a significant and long‑awaited uplift to the Approved Mileage Allowance Payments (AMAP) rates, increasing the headline rate for cars and vans from 45p to 55p per mile for the first 10,000 business miles, effective from 6 April 2026 (2026/27 tax year).
This represents the first change in more than a decade and reflects the rising cost of vehicle ownership, including fuel, maintenance and insurance. Alongside this, HMRC has also updated its advisory fuel rates (AFRs) as at 21 May 2026, while importantly no changes have been made to the underlying treatment for electric vehicles.
What has changed?
For 2026/27, the AMAP rates are now:
| Details | Pre 6 April 2026 | Post 6 April 2026 |
| Cars and vans (first 10,000 miles) | 45pence per mile | 55 pence per mile |
| Car and vans (above 10,000 miles) | 25pence per mile | 25 pence per mile (unchanged) |
| Motorcycles | 24 pence per mile | 24 pence per mile (unchanged) |
| Additional passengers | 5 pence per mile | 5 pence per mile (unchanged) |
| Bicycles | 20 pence per mile | 20 pence per mile (unchanged) |
Impact for employers
Employers can now reimburse employees up to 55p per mile tax-free when employees use their own vehicles for business travel. Payments at or below AMAP remain free of Income Tax and National Insurance, while payments above will create a taxable benefit.
For organisations paying at or near the previous 45p rate, increasing to 55p may create a direct increase in travel costs. However, continuing to pay below AMAP rates may lead to increased employee claims for Mileage Allowance Relief and additional administrative burden.
Impact for employees
Employees using their own vehicles will benefit directly from higher reimbursements, or from increased tax relief where employers do not pay the full rate.
For example, an employee driving 10,000 business miles would see tax-free mileage increase from £4,500 to £5,500.
Electric vehicles
No separate AMAP rate has been introduced for electric cars. Employees using their own electric car continue to use the same 55p/25p rates as petrol and diesel vehicles.
However, for company-provided electric vehicles, reimbursement is based on advisory electricity rates, currently 7p per mile for home charging and 15p per mile for public charging.
Advisory fuel rates – June 2026 update
AFRs remain the benchmark for reimbursing business mileage in company cars.
HMRC have announced AFR updates for June 2026, typical AFR ranges are:
- Petrol: 14p–26p per mile
- Diesel: 15p–23p per mile
- LPG: 11p–21p per mile
- Electric: 7p (home) / 15p (public)
Conclusion
The increase in AMAP rates marks a significant shift after years of stagnation, offering welcome relief to employees. However, the increase in the AMAP rates are limited to those which relate to the first 10,000 business miles incurred, which will be disappointing for high-mileage employees.
Employers should review travel policies to ensure they remain competitive, compliant, and aligned with the evolving mix of vehicles across their workforce. Equally, the need for accurate mileage records is something all employers need to ensure they are being maintained.
Please contact the Employment Taxes team if you have any questions.
