The latest HMRC mileage and advisory fuel rate updates are expected to have a direct financial and administrative impact on a wide range of businesses, particularly those with employees regularly travelling for work using their own vehicles.
The headline of an increase of 10p per mile in rates is marked, and comes on the back of a government reaction to the recent rise in the cost of fuel. Now at 55p per mile, it only applies to travel of up to 10,000 miles per tax year, with no corresponding increase beyond this threshold, leaving the 25p rate unchanged.
While the immediate focus will naturally fall on the increase itself, the changes also create immediate practical implications for employers around reimbursement policies, payroll administration and employee claims for tax relief.
For many organisations, now is the right time to review whether existing mileage policies still reflect current HMRC guidance and the true cost pressures facing businesses.
Mileage reimbursement rates may appear relatively minor on paper, but for businesses with mobile teams, regular client travel or multiple operational sites, the financial impact can quickly become significant.
Many employers have historically reimbursed employees at 45p per mile, a figure that has become widely adopted over time. However, with HMRC’s approved rates now increasing, businesses must decide whether to update reimbursement levels or maintain their current policy.
There is no requirement for employers to match HMRC’s approved rate, but retaining lower reimbursement levels may create additional considerations for both employers and employees.
Employees may still be able to claim tax relief
Where employees are reimbursed below HMRC’s approved mileage allowance rate, they may still be entitled to claim Mileage Allowance Relief on the difference.
This can typically be claimed through a self-assessment tax return or directly with HMRC, depending on the individual’s circumstances.
For employees covering substantial business mileage during the year, the difference between employer reimbursement and the approved HMRC rate could become financially meaningful.
Nicholas Smith, Head of Tax at Duncan & Toplis, said:
“Many employers will now be reviewing whether their mileage reimbursement policies remain appropriate in light of the updated HMRC rates.
“While some businesses may choose to increase reimbursement levels, others may decide to retain existing policies due to wider cost pressures. In those situations, employees should still understand that tax relief may be available where they are reimbursed below the approved rate.”
The changes also create an opportunity for businesses to review wider travel, expenses and reimbursement procedures.
This may include:
For some businesses, particularly those operating hybrid or field-based working models, mileage reimbursement policies can play an important role in employee satisfaction and retention as well as cost management.
Clear communication and consistency will therefore be important as businesses decide how to respond.
The updated HMRC rates may also prompt businesses to reconsider broader operational and fleet decisions, including company car arrangements, travel expectations and overall business travel costs.
As fuel prices and operating costs continue to fluctuate, many organisations are reassessing how travel policies align with commercial priorities, sustainability goals and employee expectations.
Reviewing arrangements proactively can help businesses avoid confusion later and reduce the risk of inconsistent treatment across teams.
Changes to HMRC mileage and fuel rates can affect payroll, expenses, tax relief claims and wider business policy decisions.
At Duncan & Toplis, we support businesses and individuals with practical tax advice that helps them remain compliant while making informed commercial decisions. Our specialists can help review reimbursement policies, assess the tax implications of mileage arrangements and support businesses in updating internal processes.
If you would like to discuss how the latest HMRC mileage and fuel rate changes may affect your business or employees, please contact us.
