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 2 million employees and 1 million self-employed individuals, saving over £120 a year for a worker doing 6,000 business miles.

The government will legislate retrospectively for this change at the earliest opportunity. In the interim, HMRC will exercise its discretion and will not seek to collect any income tax or National Insurance Contributions that may otherwise arise on payments made before the legislation takes effect.

Looking ahead and beyond 2026/27, the government has already committed to a review of these rates and will set this out at the Budget.

This announcement is one part of a package of support for households and businesses announced today.

https://www.theyworkforyou.com/wms/?id=2026-05-21.hcws62.0