Drivers handed cash boost as HMRC finally raises mileage rate after 15 years

Millions of workers and self-employed drivers could be missing out on extra cash after HMRC quietly increased the mileage rate from 45p to 55p a mile for the first 10,000 business miles. The change, which took effect in April, means employers still using the old rate may now be underpaying staff, while freelancers and sole traders risk losing hundreds of pounds if they fail to update their expense claims.

This may seem like small change but it’s very significant. A 10 pence change landed in April and some businesses are just catching up. It could save your workers (and you) a small fortune.

The Government has finally increased the mileage rate for people using their own car for work. This doesn’t apply to company cars. After fifteen years stuck at 45p, the milage rate has now been bumped up to:

55p a mile for the first 10,000 miles and 25p a mile after that (that’s not changed)

The new rate has applied since 6 April 2026. If you’re still paying 45p, you’re underpaying your staff. If you’re self‑employed, you’re underclaiming your own expenses.

WHAT THIS MEANS

Employees

Photo by Roger Starnes Sr on Unsplash

If you pay less than 55p, employees can claim tax relief on the difference. If you pay the full 55p, they’re square, and happier with less admin to worry about.

Self‑employed

You or someone else working with you who is self-employed, can now claim 55p per mile as a business expense.

Small employers

Budget for the increase, especially if you’ve got employees on the road. It’s still cheaper than running a company car.

WHY THE CHANGE

Running a car has become eye‑wateringly expensive with fuel, insurance, repairs, tyres, and depreciation. The old 45p milage rate was set back in 2011, when petrol was cheaper and life was simpler. However even 55p hardly covers it.

DON’T GET CAUGHT OUT

If you’re still using 45p in your payroll, expenses system or accounting software, update it now. HMRC won’t chase you for underpaying, but the people working for you might.

If you’re self‑employed and still claiming 45p, you’re literally leaving money on the table.

55p is the new rule. 45p is history.