Approved mileage rate rises to 55p: what the self-employed need to know

On 21 May 2026, Chancellor Rachel Reeves announced a 10p per mile increase to tax-free mileage rates, backdated to 6 April 2026. HMRC has also now updated its official guidance to confirm the change.

The approved mileage allowance payment (AMAP) rate for cars and vans rises from 45p to 55p per mile for the first 10,000 business miles you drive in a tax year. The rate above 10,000 miles stays at 25p per mile. Rates for motorcycles and bicycles are unchanged.

The previous rate of 45p had been frozen since 2011. In that time, the cost of fuel, insurance and running a vehicle for work has risen considerably, and it is something we have been raising with government for years.

If you are self-employed and use your own car or van for business travel, you can use the AMAP rate to deduct vehicle costs as a business expense through your Self Assessment tax return.

Rather than keeping track of every individual cost, fuel receipts, insurance, servicing, you simply multiply your business miles by the approved rate. That total is then deducted from your taxable profit, which reduces the amount of Income Tax and National Insurance you pay.

The increase from 45p to 55p means you can deduct more for every business mile you drive, and because it is backdated to 6 April 2026, it applies to every business mile you have already driven this tax year.

For a full breakdown of how to claim, read our guide on how to claim mileage allowance if you are self-employed.

To give you an idea of how it might impact you and your business, here is an example saving for someone who has driven 6,000 business miles in the 2026/27 tax year visiting clients.

• At the old rate: 6,000 x 45p = £2,700 off your taxable profit
• At the new rate: 6,000 x 55p = £3,300 off your taxable profit
• That is £600 more deducted from your profit
• Saving for a basic-rate taxpayer: £120
• Saving for a higher-rate taxpayer: £240

Business miles are journeys made for genuine work purposes, travelling to a client site, visiting a temporary workplace, or attending a work meeting. Your regular commute between home and a fixed place of work does not count.

For most freelancers, whose work takes them to different locations, a significant portion of driving will qualify. The key is keeping a mileage log: jot down the date, destination, purpose and miles for each journey. A simple spreadsheet or mileage app would be sufficient. 

You can find more detail on what qualifies and how to record it in our guide to car expenses sole traders can claim.

The new 55p rate applies to your first 10,000 business miles in the tax year. Beyond that, the rate drops to 25p per mile, which is unchanged.

If you work through an umbrella company or are treated as a worker rather than being fully self-employed, the AMAP rate also sets the maximum your umbrella or engager can pay you tax-free per business mile. If you receive less than 55p per mile, you may be able to claim Mileage Allowance Relief on the shortfall. The rules are more complex in this situation, so it is worth checking with HMRC's guidance or speaking to your accountant.

If you already use the simplified mileage method in your Self Assessment return, you do not need to do anything differently. Just use 55p per mile when you complete your 2026/27 return. Make sure your mileage log covers the full tax year from 6 April 2026 so you can claim the new rate on every qualifying mile.

If you are not sure whether the simplified mileage method is right for you, or if you have been tracking actual vehicle costs instead, it is worth speaking to your accountant to check which approach leaves you better off. 

You can read more about both approaches in our guide to car expenses sole traders can claim.