The Chancellor, Rachel Reeves, announced a number of measures on 21 May 2026 as part of the Government’s response to rising cost pressures and global uncertainty.
Among these was a change to the approved mileage rates for employees and the self‑employed using their own vehicles for work.
For individuals across Oxford and Oxfordshire, this update provides some welcome support, particularly where travel forms a regular part of working activity.
New mileage rates from April 2026
The approved mileage rate for cars and vans has increased from 45p to 55p per mile, applying to the first 10,000 business miles in each tax year.
This change has been backdated to 6 April 2026.
For mileage above 10,000 miles, the rate remains unchanged at 25p per mile.
Further guidance on mileage rates and allowances can be found via GOV.UK
👉 https://www.gov.uk/expenses-and-benefits-business-travel-mileage/rules-for-tax
This increase is intended to help offset rising fuel and running costs for those who rely on personal vehicles for business travel.
“This change reflects the rising cost pressures many employees and business owners are facing,” says Jordan Lyne at The MGroup. “For those who travel regularly, it will make a noticeable difference over time.”
What if your employer pays less?
Where an employer reimburses mileage at a rate below the approved level, employees may still be able to claim the difference through Mileage Allowance Relief (MAR).
For example:
- If 35p per mile is reimbursed
- Tax relief can be claimed on the remaining 20p per mile
Where no mileage allowance is paid, tax relief can usually be claimed on the full 55p rate (up to 10,000 business miles), provided the journeys qualify as business travel (excluding normal commuting).
“It’s important that employees understand their entitlement,” adds Wendy Tatham partner at The MGroup. “Unclaimed mileage relief is a common area where individuals can miss out unnecessarily.”
Other mileage rates
The government has confirmed that other approved mileage rates remain unchanged for now:
- Motorcycles: 24p per mile
- Bicycles: 20p per mile
In addition, where employees carry passengers for work purposes, employers may pay an extra 5p per passenger per mile.
These adjustments remain under review and could be revisited at a future Budget.
Practical considerations
While the increase provides support, individuals and businesses should still ensure that:
- Business mileage is accurately recorded
- Claims are submitted correctly
- Reimbursement policies are reviewed to reflect the updated rates
For employers, this may also be a good opportunity to review payroll processes and expense policies to ensure they align with current guidance.
A helpful adjustment in a period of rising costs
In the context of rising fuel and operating costs, the increase in mileage rates offers a practical and immediate benefit for employees and the self‑employed.
A trusted, expert and supportive approach, backed by independent advice, can help ensure that available reliefs are fully utilised and that compliance requirements are met.
If you would like support reviewing mileage claims, tax relief or wider personal tax matters, we are always happy to help
👉 https://www.themgroup.co.uk/contact-us/