Millions of workers who use their own cars for business travel are being urged to check whether they could claim more money back from HMRC after a major increase to the approved mileage rate.
The change means eligible employees and self-employed workers can now claim tax relief based on a higher mileage allowance, potentially boosting the amount they can recover for work-related journeys.
However, experts warn many drivers could miss out because HMRC does not apply the relief automatically, meaning workers must actively submit a claim to receive any benefit.
HMRC increases mileage rate to 55p per mile
Under updated HMRC rules, the approved mileage allowance has increased from 45p to 55p per mile for the first 10,000 business miles travelled in a tax year.
The rate for any mileage above 10,000 miles remains unchanged at 25p per mile.
The increase applies from April 6 2026 and covers mileage already driven during the current tax year.
The allowance is designed to help workers who use their own vehicles for business purposes, including travelling between work sites, visiting clients, attending meetings or carrying out other job-related journeys.
Find out more and make a claim on gov.uk.
What does the increase mean for drivers?
Workers whose employers pay less than the approved HMRC mileage rate may be able to claim tax relief on the difference.
For example, if an employer continues to reimburse business travel at 45p per mile, drivers could potentially claim relief based on the additional 10p per mile now recognised by HMRC.
Importantly, the mileage allowance does not mean workers receive 55p per mile directly from HMRC.
Instead, the relief reduces the amount of income tax owed, meaning the value of any refund depends on an individual's tax band and circumstances.
Reacting to the announcement on BBC Radio 5 Live with Adrian Chiles, MoneySavingExpert.com (MSE) founder Martin Lewis said: "This has been frozen at 45p since, I think 2011, so the increase from 45p to 55p for the first 10,000 miles that you drive is really important.
"To explain to people how this works: if you drive (your own car, not a company car) as a part of your work (for example, care workers driving from house to house to house), this mileage allowance is the amount that your employer can give you to cover your costs, and you don't pay tax and National Insurance on it. So it doesn't count as earned money. It's a special allowance. So moving that from 45p to 55p is important.
"It is also worth noting, if your employer doesn't give you the full amount of the mileage allowance – let's imagine they give you 30p (and the allowance is 55p) – you can claim tax back on that 25p per mile that you drive as part of your work (not commuting)."
Why millions could be missing out
Tax experts say many employees are unaware that mileage tax relief is not paid automatically through payroll.
Instead, eligible workers must submit a claim themselves, either through HMRC's P87 process or via a Self Assessment tax return.
Those who fail to make a claim could be leaving money unclaimed, particularly if they regularly drive for work throughout the year.
Some workers may also be able to make claims for previous tax years, subject to HMRC rules and provided they have sufficient records to support their application.
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How to claim mileage tax relief
To make a successful claim, workers should keep accurate records of:
• The dates of business journeys
• Destinations travelled to
• The purpose of each trip
• Total business mileage completed
Eligible taxpayers can review their position through their HMRC Personal Tax Account or use the relevant HMRC claim process to submit mileage expenses.
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