Tax-free mileage rate above 10,000 miles rises to 35p from April 2027
The Budget raises the Approved Mileage Allowance Payments rate for business mileage above 10,000 miles from 25 pence to 35 pence from 6 April 2027. Benchmark subsistence rates and the employment expenses claim threshold change from April 2028.
What changed
The government will increase the Approved Mileage Allowance Payments (AMAPs) for business mileage above 10,000 miles from 25 pence to 35 pence per mile. The change takes effect from 6 April 2027 and also applies to the matching National Insurance contributions disregard for relevant motoring expenditure.
Benchmark Scale Rates, which employers use to reimburse travel and subsistence without checking receipts, will be modernised: £20 for travel over 5 hours, £60 for over 10 hours and £75 for over 24 hours. Overseas Scale Rates will be simplified into a tiered approach. Implementation is from 6 April 2028.
The £2,500 Self Assessment threshold for claiming employment expenses will be removed from April 2028, so more employees can claim relief on non-reimbursed expenses through PAYE.
HRjoy’s view
This mostly helps employees who drive their own vehicles a lot for work. If you already reimburse more than 25 pence a mile above 10,000 miles, more of that payment will be tax-free from April 2027. The practical job is updating the expenses policy and payroll in time, and checking HMRC's guidance once the legislation is made.
Source
General information for employers in Great Britain, not legal advice.
What to do
- Update your mileage policy and payroll settings so business mileage above 10,000 miles in the tax year can be paid at 35 pence tax-free from the start of the 2027 to 2028 tax year. by 6 April 2027
- Tell staff who drive their own vehicles for work about the new rate when you update the policy.
- Note the new subsistence benchmark rates for your 2028 expenses policy review.