Use your own car or van for work? You could get extra tax relief worth £100s as mileage rates rise announced
Workers who use their own car or van for business journeys could receive more tax relief from April 2027 after the Government announced changes to mileage rates.
By MoneySavingExpert
Workers who use their own car or van for business journeys could receive more tax relief from April 2027 after the Government announced changes to mileage rates.
The rate for the first 10,000 business miles will be fixed at 55p per mile. The Government had previously planned for that rate to end in April 2027.
For business travel above 10,000 miles, the rate will rise from 25p to 35p per mile from 6 April 2027.
The changes apply to work journeys and not ordinary commuting. Motorcycle and bicycle rates will remain unchanged at 24p and 20p per mile respectively.
Employers do not have to pay the full approved mileage rate, or make a payment at all. Where an employer pays less than the approved amount, an employee can usually claim tax relief on the difference through HMRC or their tax return if they complete a self-assessment return.
The Treasury estimates that the measures will benefit around three million employees and self-employed people.
It says the changes could provide additional tax savings of about £120 a year for someone driving 6,000 business miles, compared with the rates before April 2026. Someone covering 15,000 business miles could see additional savings of around £300.
The new arrangements were announced on 26 October, with the higher rate for mileage above 10,000 miles due to take effect from 6 April 2027.