Chancellor Rachel Reeves has confirmed the HMRC mileage allowance for under 10,000 miles will rise by 10p to 55p per mile, backdated to April 2026. Now drivers have had their say on the matter11:45, 22 May 2026Chancellor Rachel Reeves has announced the work mileage allowance for journeys under 10,000 miles will increase by 10p to 55p and will be backdated to April 2026. The declaration from the Chancellor means those who use their own vehicle for work purposes (such as care workers) can receive up to 55p per mile free from tax and National Insurance.‌The decision represents the very first occasion the rate has risen since 2011, delivering much-needed financial support to frontline staff including community carers, tradespeople, and mobile engineers. The adjustment affects your finances differently depending on how your employer presently manages expenses. If your employer reimburses you the full official HMRC rate, they can now provide you with 55p per mile completely tax-free. For someone covering 5,000 work miles, this amounts to an additional £500 annually compared to the previous rate.‌If your employer reimburses you less than 55p per mile (e.g. 35p) you don't miss out. You can claim Mileage Allowance Relief through HMRC's Job Expenses page. You'll receive a tax rebate on the 20p difference.‌Those who are self-employed or a sole trader can now deduct 55p per mile from their business profits on their next self-assessment tax return, reducing the overall tax bill.The announcement has been welcomed by numerous drivers who have delivered a 2-word assessment of the situation, as they say it's "about time" the rise was brought in.‌One person posted on Reddit: "It's about time it was updated."While another agreed: "About time. 15 years it's been stuck at 45p." Another user chimed in: "Yeah I say this all the time to clients at work! Nearly 15 years."A fourth commented: "Great idea. Putting money back into the hands of key workers."‌Someone else also shared their view, writing: "A sensible change given the increased cost of driving. No increase in the rate for those who drive over 10,000 miles per year though, which seems difficult to justify. Is there any evidence to suggest that those who drive over 10,000 miles per year have access to economies of scale have not been affected by inflation?"Addressing the House of Commons on Thursday (May 21), Ms Reeves declared: "Having heard from my honourable friends the members for Oldham West, Chadderton and Royton and the trade union Unison, I can today announce a 10p per mile increase in tax free mileage rates, backdated to April 2026; benefiting those who need to drive for work, from care workers to plumbers."Madam deputy speaker, when a country faces challenges because of higher oil and gas prices, we must ensure that those who benefit from increased prices and volatility pay their fair share.‌"In my first Budget, I extended and increased the Energy Profits Levy. Last year, I announced a new, permanent windfall tax regime on oil and gas price shocks."She went on to add: "Last month, I increased the Electricity Generator Levy, alongside further action to weaken the link between high gas prices and electricity prices."Today, I am bringing forward specific changes to the taxation of foreign branch profits; changing how companies are taxed in relation to their overseas activities.Article continues below"Currently, some oil and gas groups that operate overseas through foreign branches have structured their tax affairs in a way which ensures they pay little or no Corporation Tax on their UK energy trading profits."Currently, some oil and gas groups that operate overseas through foreign branches have structured their tax affairs in a way which ensures they pay little or no Corporation Tax on their UK energy trading profits."Rules to keep in mindKeep records – To claim these tax-free amounts, you must track the date, purpose, start/end locations, and exact distance of every business tripCompany cars don't count - This 55p rate is strictly for people using their own personal cars. Separate advisory fuel rates apply if you drive a vehicle owned or leased by your company.Commuting is excluded – Normal everyday travel between your home and your regular workplace is not eligible for mileage claims.