For the first time in over 15 years, HMRC has increased the approved business mileage rate for cars and vans.
From April 2026, the approved mileage allowance has increased from 45p to 55p per mile for the first 10,000 business miles.
For many small business owners, this could mean hundreds or even thousands of pounds of additional tax-free reimbursements each year.
If you regularly travel for work, this is a change worth understanding.
What Is the HMRC Mileage Allowance?
If you use your personal car for business journeys, your company can reimburse you using HMRC’s approved mileage rates.
The new rates are:
| Vehicle Type | First 10,000 Miles | Over 10,000 Miles |
| Cars & Vans | 55p per mile | 25p per mile |
| Motorcycles | 24p per mile | 24p per mile |
| Bicycles | 20p per mile | 20p per mile |
This reimbursement is usually:
- Tax-free for the employee/director
- A deductible business expense for the company
That makes it a very tax-efficient way to take money from your company.
Why This Matters for Small Business Owners
Many directors and business owners use their own vehicles for:
- Visiting clients
- Travelling to job sites
- Attending meetings
- Networking events
- Supplier visits
- Site inspections
Previously, the 45p rate had not changed since 2011, despite rising fuel, insurance and vehicle costs.
The increase to 55p per mile means business owners can now reclaim more from their company for the same journeys.
A Simple Example
Imagine you drive 8,000 business miles per year.
Old Rate (45p)
8,000 × 45p = £3,600
New Rate (55p)
8,000 × 55p = £4,400
That’s an additional £800 you can reimburse yourself from your company tax-efficiently.
For many small business owners, this effectively means:
- More money back into your personal account
- Lower corporation tax for the company
- Better reimbursement for genuine business travel costs
Can You Take Money Out of Your Company Using Mileage Claims?
In simple terms – yes.
If you personally pay for fuel and vehicle costs while using your own car for business journeys, your company can reimburse you using the HMRC mileage rates.
This means you are effectively paying yourself back for business travel you have already personally funded.
For directors of limited companies, this can be a very useful and tax-efficient way of extracting money from the business, provided proper mileage records are kept.
What Counts as Business Mileage?
Business mileage usually includes journeys such as:
- Travelling to client meetings
- Temporary workplaces
- Business events
- Supplier visits
- Site visits
Ordinary commuting to your regular workplace is normally not allowable.
This area can sometimes become confusing, especially for directors who work in multiple locations.
That is why speaking with an accountant is important.
Keep Proper Mileage Records
To support a mileage claim, you should keep records including:
- Date of travel
- Start and end locations
- Purpose of the journey
- Number of miles travelled
Good record keeping helps protect you in the event of an HMRC enquiry.
How MITLEV Accountants Can Help
At MITLEV Accountants, we help small business owners make sure they are claiming the correct business expenses in the most tax-efficient way possible.
We can help you:
- Understand what business mileage is allowable
- Calculate accurate mileage claims
- Ensure reimbursements are tax-efficient
- Keep compliant records for HMRC
- Review whether mileage claims or company-owned vehicles are more beneficial
Many business owners either underclaim mileage or accidentally claim incorrectly. Having proper advice can make a significant difference over time.
Final Thoughts
The increase in HMRC mileage rates is welcome news for business owners who regularly travel for work.
For directors and employees using their own vehicles, the higher rate means larger tax-free reimbursements and potentially lower corporation tax bills for the company.
If you travel regularly for business and want to ensure you are claiming correctly, MITLEV Accountants can help review your position and make sure you are not missing out on valuable tax relief.
