UK confirms 35p mileage rate above 10,000 miles from April 2027

The government also confirmed that the 55p rate for the first 10,000 miles will be permanent. The policy was first announced on 27 October and applies to Approved Mileage Allowance Payments for employees and to the corresponding simplified mileage rates for self-employed drivers. The 35p change will also apply to the National Insurance disregard for relevant motoring expenditure.^[1][2]

What the approved rate does

Approved mileage rates let employers reimburse qualifying business mileage in employees’ private vehicles without income tax up to the approved amount. The same car and goods-vehicle rates are used by eligible self-employed businesses calculating simplified motoring deductions. An employer is not required to pay the maximum rate; the measure changes tax treatment within the approved limit rather than the employment reimbursement policy.^[2][3]

Current and future rates must be separated

HMRC’s current 2026–27 table still shows 55p for the first 10,000 car or van miles and 25p above that threshold. The announced 35p rate is for mileage from 6 April 2027 and should not be applied to earlier mileage. The announcement makes no change to the separately listed motorcycle and bicycle rates.^[1][3]

Legislation still to follow

HM Treasury says the change will be made through a statutory instrument later in 2026. The announcement and OOTLAR establish the policy and intended date, but do not supply the final instrument. Payroll and expense teams should keep vehicle type, business purpose, accumulated mileage and tax year distinct, then update systems only against the final legislation and refreshed HMRC rate tables.^[1][3]

Groups with UK employees using private cars or vans should review reimbursement policies and payroll treatment before April 2027. Self-employed users should apply the published rate for the relevant year; simplified mileage is a deduction method, not a payment from HMRC. Reopen the analysis on publication of the statutory instrument to confirm exact commencement, consequential National Insurance drafting and any transitional detail.^[1][2][3]