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Mileage allowance rise for company and private vehicles 2026

For any business with staff on the road, ensuring your reimbursements are accurate and tax-compliant is critical. Here’s a clear breakdown of what’s changed and, more importantly, how to prevent it from turning into a payroll headache.

Anna Edwards
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Contents

The Grey Fleet shake-up: AMAP rises to 55pCompany cars: the new June advisory fuel ratesSay goodbye to mileage spreadsheets: automate compliance

If you manage a fleet, process expense claims, or run a finance team, your job just became noticeably more complex. Between the Chancellor’s announcement to increase the Approved Mileage Allowance Payment (AMAP) and HMRC's latest quarterly Advisory Fuel Rates (AFR), the compliance goalposts have shifted.

The Grey Fleet shake-up: AMAP rises to 55p

Let’s start with your grey fleet - the employees who use their own cars for business. For the first time in over a decade, the tax-free AMAP rate has been increased, moving from 45p to 55p per mile for the first 10,000 miles.

Crucially, this change is backdated to April 2026.

To ensure your staff are reimbursed correctly, your payroll and HR teams will need to update your company policies and retroactively apply the new rate from the start of the tax year. Forgetting to do so risks frustrating your employees and creating messy tax relief claims down the line.

>> Your mileage rate questions answered here

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Your mileage rate questions answered

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Company cars: the new June advisory fuel rates

Next, we have your company-provided vehicles. As of 1st June, HMRC’s latest quarterly AFR updates are now live.

Keeping on top of these fluctuating rates manually is notoriously difficult, especially with mixed fleets. For electric vehicles, the rate is now split based on where the car is charged - 7p per mile for home charging and 15p for public charging. 

For petrol and diesel, the rates continue to change based on engine size, with this quarter's figures ranging from 14p to 26p.

Because HMRC reviews these figures four times a year, manually managing the precise pence-per-mile rate to avoid taxable profits or fuel benefit penalties can be a significant and recurring drain on resources.

Say goodbye to mileage spreadsheets: automate compliance

Expecting your team to manually track these moving targets, separate personal from business trips, and calculate backdated pay on spreadsheets is not only inefficient - it’s completely unnecessary.

At ABAX, we believe compliance shouldn't be a manual chore. That’s why our system is designed to handle these legislative changes for you, automatically.

When HMRC updates the AFR or the government adjusts the AMAP, the ABAX system is updated. ABAX digitally logs every journey, splitting private and business mileage, and our software instantly applies the correct, current rate based on the vehicle's engine size, fuel type, and ownership status.

No manual data entry or backdated calculations. Just accurate employee reimbursements and audit-ready records that keep you compliant with HMRC.

Ready to talk?

If you’re ready to stop chasing mileage rates and let automation do the heavy lifting, speak to our team to discover how ABAX can streamline your fleet management today.

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About the author

Headshot of ABAX UK Marketing Manager Anna Edwards

Anna Edwards

Global Marketing Excellence Manager and UK Regional Marketing Manager

Anna Edwards is a B2B marketing expert at ABAX, specialising in content, campaigns and thought leadership across mobility and asset management.

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Your mileage rate questions answered

  • There are two major updates. First, for employees using their own vehicles for business (the ‘grey fleet’), the Approved Mileage Allowance Payment (AMAP) rate has increased from 45p to 55p per mile for the first 10,000 miles, backdated to April. You can read a complete breakdown of this campaign on the MoneySavingExpert analysis of the Chancellor's mileage allowance increase.

    Second, for company cars, HMRC has issued its latest quarterly updates. You can find the precise, up-to-date figures directly on the official HMRC Advisory Fuel Rates guidance.

  • It depends on who owns the vehicle:

    • AMAP is used when employees drive their own personal vehicle for business journeys.

    • AFR (the variable quarterly rates) is used to reimburse employees for business fuel in a company-provided car, or when employees need to repay the cost of private fuel used in a company vehicle. You can verify current categories via the HMRC Advisory Fuel Rates guidance

  • No, paying the full 55p is not a legal requirement. However, if your company pays a lower rate, your employees are entitled to claim tax relief from HMRC on the shortfall. If you pay less than the statutory rate, your staff can find out how to claim the difference back by looking at the advice on the MoneySavingExpert mileage allowance guide

  • Yes. HMRC tiers petrol and diesel rates based on engine capacity (cc). You must apply the exact correct tier for each vehicle to prevent tax complications. The ABAX system removes this administrative burden by automatically assigning the correct HMRC-approved rates to each vehicle in your system based on its registration details.

  • Yes. ABAX provides fully compliant, digital mileage logs that meet all HMRC record-keeping requirements. In the event of an audit, you can hand over your reports with complete peace of mind.

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