Mileage rate 2026: what 55p actually changes for sole traders

The HMRC Approved Mileage Allowance Payment (AMAP) rate for cars and vans went from 45p to 55p per mile for the first 10,000 business miles in the 2026/27 tax year. The change was announced on 21 May 2026 and backdated to 6 April 2026 (GOV.UK: Travel — mileage and fuel rates and allowances). The 25p-per-mile rate for miles above 10,000 is unchanged. The 24p motorcycle rate, the 20p bicycle rate, and the 5p-per-passenger supplement are unchanged.

It is the first change to the 45p rate since 2011. The announcement was the main story in every accountancy trade publication for a week. If you are a sole trader with a van who keeps a mileage log, you have probably seen the headline. What most coverage has not done well is the operational side: what to do this week if you have been logging at 45p since 6 April, and the simplified-vs-actual decision that the rate change has just shifted.

This post is the operational side.

What 55p actually means for sole traders

The AMAP rate is not only an employee thing. It is also the rate sole traders use when claiming vehicle costs under HMRC's simplified expenses method. If you are a sole trader, you have two options for claiming the cost of business mileage in your Self Assessment:

• Simplified expenses. Multiply business miles by the AMAP rate. No fuel receipts, no insurance records, no depreciation calculations. The rate already includes an allowance for fuel, wear and tear, insurance, and the rest.
• Actual cost. Track the actual running cost of the vehicle — fuel, insurance, MOT, road tax, repairs, depreciation — and claim the business-use percentage. VAT-registered traders can also reclaim the VAT on the business-use portion of fuel and other vehicle costs.

The new rate is 55p for the first 10,000 business miles in the tax year, then 25p per mile after that. A plumber driving 12,000 business miles a year in 2026/27 would now claim £5,500 (10,000 × 55p) plus £500 (2,000 × 25p) = £6,000 in simplified mileage. In 2025/26 under the old rate that would have been £4,500 (10,000 × 45p) plus £500 (2,000 × 25p) = £5,000. The £1,000 difference is real, and it is on top of any other expenses.

For a sole trader whose simplified mileage is the bulk of their vehicle-related claim, the rate change is a meaningful uplift.

What to do this week if you have been logging at 45p

Three steps. None of them require an accountant, a new tool, or a long weekend.

1. Check what your mileage log is currently set to. If you use TradeTally, or any invoicing or expenses app, the mileage rate is a setting somewhere. If the default for 2026/27 was set when the app was last updated before 21 May 2026, it will still be at 45p. Open the mileage section, change the rate to 55p, and confirm. The change is automatic for any mileage you log from this week forward. (TradeTally currently does not include a built-in mileage logger — it surfaces a standalone mileage calculator and the year-end mileage figure in the SA103F export, but the day-to-day log is on you. Other apps vary — some have the rate baked in, some let you change it.)

1. Calculate the difference for 6 April to today. If you have logged, say, 4,000 business miles between 6 April 2026 and now at 45p, the difference is 4,000 × 10p = £400. That £400 is an additional expense to claim on your 2026/27 Self Assessment. It does not need to be re-logged at 55p — the £400 just needs to appear as a separate line on your year-end summary, with a note that it is the backdated difference for the period 6 April to the date you updated.

1. Keep logging from today at 55p. The 10,000-mile threshold resets every tax year, so the 55p rate applies for the first 10,000 business miles in 2026/27, then 25p for the rest. The HMRC mileage calculator is the quickest way to confirm the right number for your mileage pattern.

IPSE's guidance on this is clear: if you have already recorded mileage at 45p, you can claim the difference when you file (IPSE: How to claim mileage allowance when you're self-employed). The mechanism is straightforward, and HMRC has not signalled that they want it handled any other way.

The simplified-vs-actual decision most coverage skips

The 55p headline is good news for most sole traders. It is not, however, automatically the best method. The simplified expenses method gives you 55p per mile for the first 10,000 miles regardless of what your actual vehicle costs are. For some tradespeople, actual cost is still better.

The break-even calculation looks like this: actual cost is worth more than simplified when the real cost of running your vehicle per business mile is higher than the AMAP rate. For 2026/27, that means higher than 55p per business mile. A few examples to make this concrete:

• A sole trader driving a new diesel van in 2026, doing 8,000 business miles a year, with £1,400 of diesel, £900 of insurance, £200 of road tax, £400 of repairs, and £2,000 of depreciation attributable to business use. Total actual cost: £4,900. Per business mile: 61p. Actual is better by 6p per mile, or £480 a year.
• A sole trader driving an older petrol van, doing 5,000 business miles a year, with £600 of fuel, £500 of insurance, £30 of road tax, and £150 of repairs (no depreciation on a written-down vehicle). Total actual cost: £1,280. Per business mile: 26p. Simplified is better by 29p per mile, or £1,450 a year. (Note: with the new 55p rate, simplified is now better by more than it would have been under 45p.)
• A sole trader who is VAT-registered and drives 12,000 business miles a year. Under simplified expenses, no VAT is reclaimable on vehicle costs. Under actual cost, the business-use portion of VAT on fuel, repairs, insurance, and a proportion of purchase or lease can be reclaimed. The VAT reclaim can be worth several hundred pounds a year on its own.

The decision is not "always use simplified because the rate went up." The decision is "work out your real per-mile cost, then compare." For most sole traders with modest business mileage and an average vehicle, the rate change makes simplified the obvious choice. For high-mileage drivers, expensive vehicles, or VAT-registered businesses, the calculation has changed but the answer may not have.

You can change method from year to year, so there is no long-term lock-in. The 2026/27 year is a reasonable year to use the new rate, see how it feels, and revisit in 2027/28 if your vehicle or mileage pattern changes.

The thing most existing-software users will miss

The 55p rate is a legislative change, not an app update. Software does not know about it unless the developer has shipped a change. Most mileage-tracking tools built before 21 May 2026 will still default to 45p for the 2026/27 tax year, because that is what HMRC's published rate was when the app was last updated. The user has to go in and change it.

For TradeTally, the standalone mileage calculator uses the 55p rate automatically. For other apps, the position varies — some will have updated automatically, some will not. If you have not opened the mileage settings in your app since 21 May, the rate is almost certainly still at 45p. Open the app, find the rate, change it to 55p, save.

The other thing worth knowing: any app that supports a per-trip rate or a default rate can be left at 45p and corrected at year-end. The £400 difference (or whatever it is in your case) is reclaimable on the Self Assessment either way. But updating the rate now means the year-end export is correct without a manual adjustment, and the year-end summary you share with your accountant or HMRC online already includes the 55p figure.

The position

The 55p rate is good news. It is also backdated, which means most sole traders have a small claim to make for 6 April to whenever they updated. The bigger question is whether simplified expenses is still the right method for your specific situation, and most coverage of the rate change has not asked that question. For most tradespeople it is. For some it is not, and the difference can be several hundred pounds a year.

The work for this week is small: open the mileage settings in your app, change the rate to 55p, and calculate the backdated difference. The work for 2026/27 is to keep logging at 55p, watch for the 10,000-mile threshold, and decide before 5 April 2027 whether to stick with simplified or switch to actual cost for the year-end.

TradeTally's standalone mileage calculator uses HMRC's published AMAP rates, and the year-end SA103F export includes your mileage totals ready for the box 17 entry. The daily mileage logger is a roadmap item, not a current feature, so the day-to-day record-keeping still sits with you or whatever app you use. From £12 a month, with a 14-day free trial.

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Sources:

• GOV.UK, Travel — mileage and fuel rates and allowances (21 May 2026).
• GOV.UK, Approved mileage rates for cars and vans.
• IPSE, How to claim mileage allowance when you're self-employed.
• Williamson Croft, HMRC mileage rates rise for the first time in 15 years (announcement coverage, 21 May 2026).