The increase in HMRC’s approved mileage rate for cars and vans from 45p to 55p per mile has certainly generated some headlines today.

On the surface, it sounds simple: “Drivers get 10p more per mile tax free.”



The reality is a bit more nuanced.

It Doesn’t Apply to Everyone

Firstly, this only applies to cars and vans. Motorcycle rates remain at 24p (close to my heart of course), and bicycle rates stay at 20p.

Secondly, the HMRC mileage rates are approved allowances, not mandatory reimbursement rates. Businesses are not legally required to pay 55p per mile unless contracts or internal policies say otherwise.

Employees May Still Be Able to Claim Relief

If an employer continues paying below the approved rate, employees may instead be able to claim tax relief on the difference from HMRC.

The Real Cost for Businesses

There’s also a wider business impact that many of the headlines ignore. If employers do choose to increase mileage reimbursements, the majority of the additional cost sits with the business itself. Corporation tax relief softens the blow slightly, but only by around 20–25% depending on the business.

In other words, roughly 75–80% of the increase is still a real additional cost to the employer.

For businesses with travelling staff, care workers, sales teams, engineers or multi-site employees, this could become a significant additional expense at a time when many are already under pressure.

The Practical Work Starts Now

As always with tax announcements, the headline is the easy part. The implementation, payroll updates, policy reviews and practical implications are where the real work starts.

And for many businesses, that’s where the real cost begins too.