After 15 years without a change, the UK mileage rate, formally called the Approved Mileage Allowance Payments (AMAPs) has finally increased. Drivers can now claim 55p per mile for the first 10,000 business miles, up from the long-standing 45p rate. Chancellor Rachel Reeves announced this increase on 21 May 2026, but the government intends to apply it retrospectively to take effect from 6 April 2026.
For unincorporated landlords, the increase means more tax relief on the everyday journeys that come with running a property business. From visiting rental properties and meeting contractors to dealing with maintenance issues and attending licensing appointments, qualifying business travel using a personal car or van can now be claimed at 55p per mile for the first 10,000 miles of the tax year.
Although the legislation has not yet been formally laid before Parliament, HMRC is already administering the new 55p rate to take effect from 6 April in line with the government’s announcement. This article takes a look at the mileage rate increase and how landlords may be able to take advantage.
Key Takeaways
- The UK mileage rate increased to 55p per mile for the first 10,000 business miles, up from 45p, with effect from 6 April 2026
- The change was announced by Chancellor Rachel Reeves on 21 May and is being legislated retrospectively to the start of the 2026/27 tax year
- The 25p rate for miles above 10,000 is unchanged
- Sole-trader landlords and unincorporated partnerships can use the new 55p rate as a simplified expenses deduction for vehicle mileage
- Conversely, property companies cannot use this simplified route; they claim actual costs or pay AMAPs to a director
What is the New UK Mileage Rate from April 2026?
The new Approved Mileage Allowance Payment (AMAP) rate for cars and vans is now 55p per mile for the first 10,000 business miles in a tax year. Miles above the 10,000 threshold remain at 25p.
The mileage rate is used across several parts of the tax system. Employees and company directors can receive mileage payments up to the approved amount free of Income Tax, while sole traders and qualifying unincorporated landlords can use the same rate to calculate a simplified business mileage deduction instead of claiming actual vehicle running costs.
For National Insurance purposes, the exemption works slightly differently. The 55p rate applies to all qualifying business miles, without the separate 10,000-mile threshold used for Income Tax.
The statutory framework for employees and company directors is contained in sections 229 to 236 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003). For the self-employed, the simplified mileage rules are contained in sections 94C to 94G of the Income Tax (Trading and Other Income) Act 2005 (ITTOIA 2005).
Unincorporated landlords can also access the simplified mileage regime because the Finance Act 2018 extended the existing simplified mileage provisions to qualifying property businesses, with effect from 6 April 20217, as confirmed in HMRC Property Income Manual PIM2220.
Why was the Mileage Rate Increased After 15 Years?
The mileage rate was increased because the long-standing 45p allowance no longer reflected the real cost of using a personal vehicle for business travel. Fuel prices, insurance premiums, servicing costs, vehicle tax and general running expenses have all risen significantly since the rate was last updated in 2011.
The government has presented this increase as part of a wider cost-of-living package aimed at easing pressure on drivers facing rising fuel prices due to the Iran conflict. A broader review of all mileage rates, including motorcycles, bicycles and passenger payments, has also been promised for a future Budget.
The previous 45p rate had been in place since the 2011/12 tax year, when the Approved Mileage Allowance Payments (Rates) Regulations 2011 increased it from 40p per mile.
Can Landlords Use the 55p Mileage Rate for Property Visits?
Yes, but only if the property business is run personally or through a partnership consisting only of individuals. In those cases, qualifying business mileage can be claimed using the new 55p simplified mileage rate.
This treatment is available because the Finance Act 2018 extended the existing simplified mileage rules in ITTOIA 2005 ss 94C–94G to qualifying unincorporated property businesses, with effect from 6 April 2017. HMRC confirms the position in Property Income Manual PIM2220, which states that the property business mileage rate mirrors the trader mileage rate set out in BIM75005.
However, it is important to note that the mileage rate, or rather the mileage allowance, can only be claimed for journeys undertaken “wholly and exclusively” for the property business under ITTOIA 2005 s.272. This can include travelling to inspect rental properties, meet contractors, attend licensing appointments or travel between properties within the portfolio.
Restrictions to Know
- Not available to companies or partnerships that are not made up solely of individuals. Where property is held through a limited company, business travel is dealt with under the company’s normal expense rules, or by paying mileage to directors using Approved Mileage Allowance Payments
- Generally not available where capital allowances have already been claimed on the vehicle. In most cases, once capital allowances have been used, taxpayers continue under that treatment, subject to any applicable transitional provisions depending on when the vehicle first entered business use
- The mileage claim must satisfy the wholly and exclusively test under ITTOIA 2005 s.272. Only journeys undertaken wholly for business purposes qualify, and claims may be restricted where there is a significant private element to the trip. A property visit that doubles as a family outing is not a deductible journey
What If My Company Paid Me 45p between April & May 2026?
If your company paid mileage at 45p per mile during April and May 2026, those payments are within the AMAP limits for that period, provided they relate to qualifying business journeys. As a result, they are generally not subject to Income Tax or National Insurance Contributions.
Because the approved rate from 6 April of this year is 55p per mile for the first 10,000 business miles, a 45p payment simply represents a payment below the maximum tax-free amount HMRC allows. In these circumstances, no tax charge arises on the mileage payments themselves where they are properly supported by business mileage records.
Where this becomes relevant is the employee or director’s personal tax position. If they used their own vehicle for qualifying business travel between 6 April and 21 May, they may be able to claim Mileage Allowance Relief for the difference between what was paid and the approved rate (for example, the 10p per mile shortfall), under ITEPA 2003 s.231, usually via Self Assessment or form P87.
If mileage payments had instead been made above the approved rate during the same period, the excess would generally be treated as taxable earnings. Your employer would then need to ensure the correct tax and NIC treatment is reflected through payroll reporting in line with HMRC requirements.
Worked Example
Sarah is a higher-rate taxpayer running an unincorporated property business in her own name. She owns three rental properties across Manchester and Birmingham. In 2026/27, she drives 4,000 business miles visiting properties, meeting letting agents and dealing with contractors. Her journeys are undertaken wholly for business purposes, and her car was acquired after the business was established, meaning no capital allowances have been claimed on that vehicle.
Header | Under Old Rate (45p) | Under New Rate (55p) | Difference |
|---|---|---|---|
Mileage Deduction | £1,800 | £2,200 | £400 |
Tax Saving at 40% | £720 | £880 | £160 |
The 10p increase in the mileage rate therefore produces an additional £160 of tax relief for the year in this example. This is an illustrative calculation based on constant mileage and tax rates.
Over a five-year period at the same mileage level, the cumulative additional relief from the rate increase would be £800, assuming no changes to mileage, tax rates or legislation during that period.
Conclusion
If your situation matches any of the scenarios above, the UK mileage rate increase can have a direct impact on how much relief you are entitled to claim and how your records and reporting need to be handled. For unincorporated landlords, it feeds into simplified expenses while for company directors it affects how AMAPs are treated through payroll and expense claims.
This is a scenario where you just cannot do without a calculator. You need exact data before you proceed.
FAQs
The UK mileage rate for cars and vans is 55p per mile for the first 10,000 business miles in the tax year, and 25p per mile thereafter.
The increased rate applies retrospectively from 6 April 2026, even though the announcement was made on 21 May 2026.
Yes. The AMAP rate is the same for petrol, diesel and electric cars and vans. The rate covers fuel and electricity, insurance, repairs, vehicle tax, MOT and depreciation in a single figure.
No. The simplified expenses method is only available to individuals and partnerships made up only of individuals. A limited company landlord either claims actual running costs and capital allowances on a company-owned vehicle, or it pays AMAPs to a director using their own vehicle under ITEPA 2003 s.229.
HMRC expects a contemporaneous mileage log showing the date, start and end points, purpose of the journey and miles driven.
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