35p a mile after 10,000 business miles: government sets out plan

United Kingdom. On 26 October 2026 HM Treasury announced a plan to raise the rate for travel in a privately owned car or van after the first 10,000 business miles in a tax year from 25p to 35p per mile. The government also intends to make the 55p rate for each of the first 10,000 miles, in force since 6 April 2026, permanent. The announcement matters to employees using their own vehicles for work, employers paying mileage allowances and self-employed people using simplified vehicle expenses.

What applies now?

As at 27 October, the HMRC table for tax year 2026–27 shows 55p per mile for the first 10,000 business miles in a car or van and 25p for every mile above that. The self-employed simplified expenses guidance gives the same rates. The Treasury has not specified an effective date for 35p and HMRC has not updated the applicable rules. The announced 35p figure must therefore not yet be used as the current HMRC rate.

What would change?

The difference would be 10p for each qualifying business mile above 10,000. At 12,000 such miles, for example, the allowable amount under the announced plan would be £200 higher than at the present rate: 2,000 × £0.10. That is not an automatic £200 payment or a £200 tax saving. For a self-employed person using simplified expenses it is a potential deduction from taxable profit; for an employee it affects the tax-free allowance ceiling or relief on an underpaid allowance. Employers decide how much to reimburse and are not required by this announcement to pay the maximum rate.

What should businesses do?

Keep a log of business journeys recording dates, routes, purposes and miles. Separate business travel from ordinary travel between home and a permanent workplace. Self-employed people should check whether simplified expenses are available: they cannot use them for a vehicle on which they have already claimed capital allowances or deducted its purchase as an expense; once they choose flat rates for a vehicle, they must keep using them while that vehicle remains in their business. Employers should review reimbursement policies and payroll calculations after HMRC publishes the effective date and updated guidance. Do not recalculate filed figures at 35p in advance.

Official sources: HM Treasury announcement, 26 October; current HMRC rates; self-employed guidance; rules for employers.