Millions of drivers who claim motoring expenses could benefit from a review of approved mileage rates.
- Millions of drivers who claim motoring expenses from their employer will see approved mileage rates reviewed ahead of a future Budget.
- Approved mileage allowance payment rates have not changed since 2011, despite motoring costs evolving significantly.
- Part of a plan to help keep prices down at the pump with fuel duty already frozen.
The Chancellor of the Exchequer highlighted the issue March 2026, recognising that approved mileage allowance payment rates for those using their own car for business mileage have not changed since 2011 even as motoring costs have evolved significantly – with low-paid workers in vital sectors like home care picking up the tab.
The workers-first review will focus on people who rely on their own car to do their job, ensuring they are not left out of pocket. As part of this, the government will meet with people struggling with increased costs to inform this work as it develops.
In the meantime, the government claim it is taking wider action to support people with the cost of living and keep prices down at the pump, including by freezing fuel duty until September 2026.
Exchequer Secretary to the Treasury Dan Tomlinson:
Millions of working people rely on their car to do their job. But mileage rates have been unchanged since 2011 and that’s increased the cost of working. A review is well overdue.
Keeping prices down at the pump is an important way we can help people with the cost of living which is why fuel duty is already frozen.
Using your own vehicle for work
This is not about those with company cars (or cars obtained via salary sacrifice schemes which are also company cars for tax purposes), but those who use their own car for business journeys.
For those using their own vehicle for work purposes, there are approved mileage rates that can be paid free of tax and National Insurance liabilities for each business mile traveled.
For those who are paid less, tax relief using the same basis can be claimed at least reducing the employees tax liability on the difference. This can be claimed via self assessment or tax reclaim form for expenses R85.
PAYadvice.UK 27/3/2026