With the price of fuel skyrocketing and showing no inclination of heading back down, chancellor Rachel Reeves has announced a 10p per mile increase in tax-free milage rates claimed by those who use their own vehicle for work.
This means the rate – which applies for the first 10,000 miles driven in the tax year before being reduced – has gone up to 55p per mile, backdated to April 2026. You can still claim an additional 5p per mile for each colleague you carry on the same business journey.
For anyone eligible for mileage relief, it’s more important than ever to understand the available claiming methods and ensure you’re using the most effective option for your circumstances.
How Does AMAP Affect Business Owners?
For business owners (including self-employed people) the Approved Mileage Allowance Payments (AMAP) rates for cars and vans are the same as for everyone else.
When receiving AMAP, there are two ways to claim: the flat-rate mileage method, or the actual-cost method. Both have their advantages and drawbacks, understanding these is especially important if you’re a sole trader, as HMRC expects you to stick with the mileage method for a vehicle once it has been chosen, rather than switching back and forth each year.
Flat-Rate Mileage Method
This is the simpler of the two methods to claim, involving recording how many business miles you cover per year and then multiplying that by the mileage rate to find how much you can claim back.
This method involves very little paperwork and is best for vehicles that are lower-cost or travelling a moderate mileage.
Actual-Cost Method
With this method, you track all motoring expenses throughout the year – including fuel, insurance, maintenance, finance interest, and capital allowances – and then claim the proportion relating to business use.
While this can produce a larger deduction for high-cost or heavily used vehicles, it requires much more detailed records and receipts than the flat-rate method.
To make sure you get exactly what you’re owed from HMRC and optimise your AMAP rates, contact our expert team at EKWilliams – we can talk you through it.