26 May 2026
With the Chancellor’s announcement of the increase to Approved Mileage Allowance Payments (AMAPs), Mileage Allowance Relief (MAR) and self-employed mileage, backdated to 6 April 2026, there has been some confusion on what this means for employers.
The rate changes are as follows:
- increase to 55p per mile for the first 10,000 miles
- remain at 25p per mile for mile 10,001 and over.
Let's run down the most frequently asked questions on this new rule to help you know what this means for businesses and employees:
1. Does the new rate apply from 1 April or 6 April 2026?
The new rate has been confirmed as applicable from 6 April as this is when the new 2026-27 tax year began.
2. If the employer paid per 45p per mile last month, are they able to pay an adjustment to the employee for the difference this month i.e 10p for those miles without any tax/NI liability?
Yes, the employer can make a retrospective top-up payment to the employee for any mileage driven from 6 April, as long as the total mileage payments do not exceed the AMAPs rates for the year, there will be no tax and National Insurance liability on this payment. Please see here for the rules for tax and here for the National Insurance rules on these payments.
3. Does the new rate apply to miles driven from 6 April 2026, or payments made to the employees made after 6 April 2026?
The new rate applies to business miles driven from the 6 April onwards, regardless of when the employee received payment for these miles.
4. Can employers pay less than the AMAPs rates?
Yes, employers are not required to pay the AMAP rate, as it is only the maximum tax-free amount, meaning they can choose to pay a lower rate or no mileage payment at all.
5. How do employees claim if the lower amount or nothing is paid to them?
Employees can claim Mileage Allowance Relief (MAR) either by submitting a claim on HMRC website or through a self-assessment tax return.
6. What if we pay 60p per mile?
The AMAP rate is the maximum tax-free amount known as the approved amount. Any excess over this must be treated as earnings and is therefore subject to tax and National Insurance deductions. The excess should also be reported on the employee’s P11d.
7. What if the employee has a company car that they use for business travel?
The AMAP rate is only applicable to employees who use their own car for business travel. If the employee is provided with a company car, then Advisory Fuel Rates (AFR) can be used to reimburse the business travel. These are separate from the AMAP rates.
8. What do we do if we have already paid some mileage payments that were driven over a period including before and after 6 April?
As the mileage is payable for the date the miles were driven not when the payment was made, the employer must split the mileage by date to find the correct backdated amount.
Example: An employer received a mileage claim payment on the 10 April for the mileage driven from Friday 3 April to Thursday 9 April. The total claim was 556 miles.
The employee was paid 556 x 45p = £250.20
The employer will need to review the total mileage for each day to work out the backdated amount:
3 April: 112 miles
4 April: 104 miles
5 April: 102 miles
6 April: 60 miles
7 April: 58 miles
8 April: 53 miles
9 April: 67 miles
Driven before 6 April: 318 miles
Driven after 6 April: 238 miles
238 x 0.10p = £23.80 is due to the employee. As the miles are below the approved amount, this payment is not subject to tax and National Insurance deductions and so the whole amount can be paid to the employee.
Information provided in this news article may be subject to change. Please make note of the date of publication to ensure that you are viewing up to date information.