Mileage Allowance Rises to 55p Per Mile — What Gravesend Drivers and Businesses Need to Know

If you use your own car or van for work, there is good news in your tax bill. The Chancellor has confirmed that the approved mileage rate is rising from 45p to 55p per mile for the first 10,000 business miles in the tax year. The increase is backdated to April 2026, meaning you may already be entitled to claim more than you realised.

For employees, sole traders and small business owners across Gravesend and Kent, this is the first change to the rate in over a decade. Here is what it means in practice, and how to make sure you do not miss out.

What Has Actually Changed?

The headline figure is straightforward. The approved mileage allowance payment (AMAP) rate for cars and vans has gone up by 10p, taking it from 45p to 55p per mile for the first 10,000 business miles in a tax year.

This rate had been frozen since 2011, despite rising fuel, insurance and vehicle costs. Many drivers and business owners have argued for years that the figure no longer reflected the true cost of running a car for work. That has finally been addressed.

Importantly, the change is backdated to April 2026, so any qualifying business mileage you have driven since the start of the current tax year should be calculated at the new rate.

Who Does This Apply To?

The new rate is relevant if you use your own vehicle for work purposes. Crucially, that means driving as part of your job — not your daily commute to and from a single, permanent workplace. Typical examples include:

Employees Who Drive for Work

If you are an employee — perhaps a care worker visiting clients across north Kent, a sales rep covering the south east, or an engineer travelling between sites — your employer can pay you up to 55p per mile tax-free for the first 10,000 business miles. You will not pay income tax or National Insurance on that allowance.

If your employer pays you less than 55p per mile (for example, 30p), you can claim tax relief from HMRC on the difference. And if your employer pays you nothing at all, you can claim tax relief on the full 55p per mile.

The Self-Employed

Sole traders and partnerships can also use the simplified mileage method to claim 55p per mile against their business profits for the first 10,000 business miles each tax year. This is often easier than working out the actual running costs of the vehicle.

Small Businesses in Gravesend

If you run a small business that reimburses staff for business mileage, you should now update your internal mileage rates and payroll processes to reflect the new 55p figure. Continuing to pay the old 45p rate is not unlawful, but your employees will be entitled to claim the difference from HMRC themselves.

What About the Rate After 10,000 Miles?

One important point worth flagging. The 10p increase applies to the first 10,000 business miles only. After that, the rate drops to 25p per mile, and at the time of writing the government has not confirmed whether this lower rate will also rise.

The flat rates for motorbikes (24p per mile) and bicycles (20p per mile) also remain unchanged for now. We are monitoring further announcements and will update clients as more detail emerges.

How to Claim the Tax Relief

If your employer does not reimburse you the full allowance, you can claim the difference back from HMRC in one of two ways:

Through Self Assessment

If you already complete a Self Assessment tax return, you can include your mileage claim there. This is the route most self-employed people in Kent will use, and it is also necessary if your annual expenses claim exceeds £2,500.

Through a P87 Claim

If you do not file a Self Assessment return and your total expenses are under £2,500, you can claim directly through HMRC using form P87, either online or by post.

Either way, you will need to keep clear, contemporaneous records of your business mileage — date, route, reason for the journey, and miles driven. A simple spreadsheet or one of the many mileage tracking apps will do the job.

A Worked Example

Imagine you are a self-employed tradesperson based in Gravesend, and you drove 8,000 business miles between April and March visiting customers across Kent and into south east London.

Under the old rate, your mileage claim would have been 8,000 × 45p = £3,600.

Under the new rate, your claim is 8,000 × 55p = £4,400.

That is an extra £800 you can deduct from your taxable profits. For a basic rate taxpayer, that translates to roughly £160 less tax. For a higher rate taxpayer, the saving is closer to £320.

What You Should Do Now

If you drive for work, there are a few sensible steps to take:

1. Review Your Records

Make sure your mileage log from April 2026 onwards is accurate and up to date. Your earlier journeys this tax year can be claimed at the new rate.

2. Talk to Your Employer

If you are employed, check whether your employer has updated their mileage reimbursement policy to reflect the new 55p rate.

3. Speak to Your Accountant

If you are self-employed or run a small business, factor the higher allowance into your tax planning for the year. It will affect your profit calculations, payments on account, and potentially your VAT position too.

How MCC Partners Can Help

At MCC Partners in Gravesend, we work with sole traders, contractors, care providers, tradespeople and small businesses right across Kent who use their vehicles for work. We can help you:

• Calculate the correct mileage claim under the new 55p rate
• Update your bookkeeping and payroll systems to reflect the change
• Submit a P87 claim or include the relief in your Self Assessment return
• Review whether the simplified mileage method or actual cost method is more tax-efficient for you

If you would like to talk through how the new mileage allowance affects you or your business, get in touch with our team at our Gravesend office on Saddington Street. We offer friendly, jargon-free advice tailored to small businesses and individuals across Gravesend, Dartford, Medway and the wider Kent area.

Visit us at 1a Saddington Street, Gravesend, Kent DA12 1ED, or give us a call to arrange a no-obligation chat.

This article is for general guidance only and does not constitute personal tax advice. Tax rules change frequently and individual circumstances vary, so please speak to a qualified accountant before acting on any of the information above.