This is part of a government package of measures intended to address rising fuel prices.
Approved mileage rates may provide relief from Income Tax where an employee or a self-employed individual makes business journeys in their own vehicle. Similar rules apply for the purposes of national insurance contributions (NIC).
Separate rates apply for motorcycles and bicycles, and there is also a rate for passenger payments.
No changes have been announced to these rates. However, the government has committed to a review of all rates and has indicated that this will be set out at a future Budget.
In a statement to parliament, Dan Tomlinson, the Exchequer Secretary to the Treasury, said:
‘In March, the government announced a review of mileage rates for employees using their own vehicle for work and the self-employed who use the simplified expenses rates.
In recognition of the pressures facing drivers as a result of the effects of the Iran war, the government is today announcing the first uprating of mileage rates in 15 years, back dated to April, to provide immediate support to both groups.
‘Mileage rates will increase for 2026/27 from 45p to 55p for the first 10,000 miles, and 25p thereafter, with effect from 6 April 2026.
‘This will represent the largest ever increase to these mileage rates, benefitting around two million employees and one million self-employed individuals, saving over £120 a year for a worker doing 6,000 business miles.’