If you use your own car for work, there is some good news from HMRC. The approved mileage allowance payment (AMAP) rate has increased from 45p to 55p per mile for the first 10,000 business miles you drive each year.

Chancellor Rachel Reeves announced the 10p increase late in May, with the new rate backdated to take effect from the start of the 2026/27 tax year on 6 April.

Incredibly, it is the first rise in the approved mileage rate in 15 years, since 2011 and for contractors who regularly travel between clients or sites, the difference could be significant.

For example, if you drive 5,000 business miles a year, the increase puts an extra £500 in your pocket tax-free compared to last year’s rate.

The rate applies to cars and vans, but it does not cover motorbikes or bicycles and the rate for carrying a passenger remains unchanged.

Importantly, the higher rate for miles beyond 10,000 stays at 25p, which has disappointed some who felt the secondary rate was equally in need of review.

It is also worth noting the temporary workplace rules that govern mileage claims, as not every journey qualifies.

If you are unsure whether your travel counts as business mileage or not, it is worth checking with us before you start claiming.

The increase forms part of a broader cost of living package from the Government and while it has been welcomed across the contracting community, some advisers have been quick to point out that it does not offset the wider tax pressures contractors have faced in recent years.

Nevertheless, it is good to see some support being offered to freelancers who are facing higher costs in many other areas.

If you have questions about how the new mileage rate applies to your business, our team is happy to help.