Change comes after RAC Foundation analysis
The chancellor has made permanent the temporary increase in the tax-free mileage rate employees can claim for using their vehicle during the course of work.
According to the Budget document:
“In May, the government announced a temporary 55p per mile rate for the first 10,000 business miles for cars and vans. At this Budget, the government is making this permanent. This will mean around 2 million employees and 1 million self-employed people, including care workers, social workers, electricians and plumbers, will see £120 a year in additional tax savings if they drive 6,000 business miles.
“The government is also increasing the mileage rate above 10,000 business miles from 25p to 35p, allowing someone driving 15,000 business miles a year to receive up to £300 in additional tax savings from both upratings.”
The so-called Approved Mileage Allowance Payment (AMAP) had been 45p per mile since 2011 before the government first said in May 2026 it would rise to 55p with the increase backdated to April 2026.
The move comes following pressure from the trade union Unison and Jim McMahon MP who relied on analysis from the RAC Foundation.
ENDS
Contacts:
Philip Gomm – Head of External Communications – RAC Foundation
[email protected] | 07711 776448
Notes to editors:
The RAC Foundation is a transport policy and research organisation which explores the economic, mobility, safety and environmental issues relating to roads and their users.
It is a registered charity. Charity number: 1002705.
The Foundation publishes independent and authoritative research with which it promotes informed debate and advocates policy in the interest of the responsible motorist. For more information visit www.racfoundation.org