Approved Mileage Allowance Payments Changes Tax Year 2026/27

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The Approved Mileage Allowance Payments (AMAPs) were reviewed and increased for tax year 2026/27 and this is now in legislation.

Employers can pay HMRC’s approved payments to reimburse employees using their own vehicle for business travel. On 25 March 2026, HM Treasury announced a ‘worker's first’ review of the AMAP that had remained unchanged since April 2011.  On 21 May 2026 in an update to the House of Commons, the Chancellor of the Exchequer announced the following rates that apply for the tax year 2026/27 onwards:

Vehicle type

First 10,000 business miles in the tax year

Each business mile over 10,000 in the tax year

Cars and vans

55p

25p

Motor cycles

24p

24p

Bicycles

20p

20p

The rules for passenger payments (5p) remain unchanged - the only rate that has been increased is the move from 45p to 55p.  This may impact reimbursements that have already been made.

The Taxation (Energy and Vehicles) Act 2026 legislates for this increase for Income Tax and updates the Income Tax (Earnings and Pensions) Act 2003 (ITEPA).  It also has the effect of increasing the rate applicable for National Insurance relief, as this rate is the same as the rate quoted in ITEPA.  Gov.UK guidance has been updated for both Income Tax and NICs.

Note that the announcement also applies to the rate for:

  • Mileage Allowance Relief (MAR); and
  • Tax relief for the self-employed via Self-Assessment  

For Bookkeepers

It is always comforting to have announcements confirmed in legislation.  Note that the 2026 Act makes two other changes that are not within the remit of bookkeepers:

1.     An increase to the Electricity Generator Levy from 45% to 55%, effective 01 July 2026; and

2.     A 12-month Vehicle Excise Duty (VED) exemption for certain Heavy Goods Vehicles (HGVs), effective 01 July 2026 to 30 June 2027

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