Last checked 28 October 2026
Quick answer
On 26 October 2026 HM Treasury said it will lock tax-free mileage at 55p per mile for the first 10,000 business miles and raise the rate above 10,000 from 25p to 35p. Around 3 million employees and self-employed people should benefit. Budget 2026 documents now confirm the date: OOTLAR measure 2.7 says 35p applies from 6 April 2027, and the Budget document says 55p for the first 10,000 miles is made permanent. Until then, HMRC’s published 2026 to 2027 rates still show 55p / 25p.
This is general information, not tax or financial advice. Check GOV.UK or speak to an accountant about your situation. Why we say this.
If you drive between jobs as a sole trader, mileage rates affect what you can deduct when you use simplified expenses. On 26 October 2026 HM Treasury published an everyday fixes package that includes a change to those rates. The Budget documents published on 28 October 2026 now confirm when the higher rate starts. See our Budget 2026 summary for sole traders for the wider changes.
What HM Treasury announced
HM Treasury’s 26 October 2026 news story says the Chancellor is locking in 55p per mile for the first 10,000 business miles and increasing the rate above 10,000 from 25p to 35p. It says around three million employees and self-employed people who use their own vehicle for work should benefit.
The same page gives two worked examples of additional tax savings:
| Business miles (example) | Additional tax savings (HM Treasury) |
|---|---|
| 6,000 | £120 a year |
| 15,000 | up to £300 |
Those are the government’s examples, not our calculations. Your own position depends on your profits, tax band and how you claim vehicle costs.
Current rates vs announced rates
HMRC’s mileage rates table (updated 21 May 2026) still lists these approved rates for cars and vans for the 2026 to 2027 tax year:
| First 10,000 business miles | Each mile over 10,000 | |
|---|---|---|
| HMRC table (2026 to 2027) | 55p | 25p |
| From 6 April 2027 (OOTLAR) | 55p (made permanent) | 35p |
Motorcycles stay at 24p and bicycles at 20p on the HMRC table. The Treasury announcement focuses on the car and van rates.
When does 35p start?
From 6 April 2027. The Budget 2026 overview of tax legislation and rates (OOTLAR), measure 2.7, published on 28 October 2026, confirms the simplified mileage rate for business miles above 10,000 rises from 25p to 35p from 6 April 2027. The Budget document (section 4.4) says the 55p rate for the first 10,000 miles is being made permanent.
The HM Treasury everyday-fixes page from 26 October 2026 did not give a start date itself. Until 6 April 2027, the published rate above 10,000 miles for 2026 to 2027 remains 25p.
Sole traders and simplified expenses
If you are self-employed and use simplified expenses for vehicles, you deduct a flat rate per business mile instead of working out actual running costs. GOV.UK’s page for 2026 to 2027 currently shows 55p for the first 10,000 miles and 25p after that for cars and goods vehicles (24p for motorcycles).
Sole traders who use the flat rate use these published rates when they work out the deduction. For the 2026 to 2027 tax year, keep using 25p for miles over 10,000. From 6 April 2027, Budget 2026 confirms the rate above 10,000 miles is 35p. Check HMRC’s rates table when it is updated for 2027 to 2028.
GOV.UK also says you cannot use simplified expenses for a vehicle you have already claimed capital allowances for (or included as an expense when working out profits), and that once you use the flat rates for a vehicle you must continue while you use that vehicle for your business. You can still claim other travel (for example train journeys) and parking on top. See our allowable expenses and mileage logs for MTD guides. Ask an accountant which method suits you.
Keep a clear mileage log either way: date, start, end, purpose and business miles, totalled across the tax year (6 April to 5 April).
Parental pay (brief note)
The same package says parental pay will be extended to more than 150,000 additional parents per year, including self-employed dads and partners who have previously missed out, giving eligible parents two weeks of support currently worth up to £194 a week. We will expand once Budget documents set out eligibility and start dates. Check GOV.UK or an adviser when the detail is published.
What to do today
- Read the HM Treasury announcement.
- Check HMRC’s rates table and the simplified expenses vehicles page for rates that apply now.
- Keep your mileage log up to date. Use 25p above 10,000 miles for 2026 to 2027; 35p applies from 6 April 2027.
- Speak to an accountant if you are unsure how the rates affect your return.
We will add a fuller note on self-employed parental pay once the detail is published.
Frequently asked questions
When does the 35p rate start?
From 6 April 2027, confirmed in Budget 2026 (OOTLAR measure 2.7). Until then, the published rate above 10,000 business miles for 2026 to 2027 is 25p.
Do sole traders use these rates?
If you use simplified expenses for a vehicle, yes: GOV.UK says you use the flat rate per mile. If you claim actual costs instead, different rules apply. Check GOV.UK or ask an accountant.
How much could I save?
HM Treasury’s examples are £120 a year in additional tax savings at 6,000 business miles, and up to £300 at 15,000. Those are the government’s examples, not a personal forecast.
Sources
All checked on 28 October 2026.
- Everyday fixes to make life easier for millions of Britons (HM Treasury, 26 October 2026)
- Budget 2026: overview of tax legislation and rates (OOTLAR), measure 2.7 (HM Treasury and HMRC, 28 October 2026)
- Budget 2026 document, section 4.4 (HM Treasury, 28 October 2026)
- Travel: mileage and fuel rates and allowances (GOV.UK, updated 21 May 2026)
- Simplified expenses if you’re self-employed: vehicles (GOV.UK)
- Mileage rates rise announced (MoneySavingExpert, 26 October 2026; earlier media reporting)
Where to check
What changed. : . 28 October 2026: First published.
