Rachel Reeves Announces Mileage Rate Increase to 55p Per Mile

In welcome news for small business owners, Rachel Reeves has announced that the HMRC approved mileage rate for cars and vans will increase from 45p to 55p per mile.

The previous 45p rate had remained unchanged since 2011, despite significant increases in fuel, insurance and vehicle running costs over the past decade. So for limited company directors using their own personal vehicle for business travel, this increase is long overdue.

What does this mean in practice?

If you use your own personal car for business journeys, your limited company can reimburse you using HMRC’s approved mileage allowance rates.

The mileage allowance is designed to cover the general running costs associated with using your personal vehicle for business travel, such as fuel, servicing, insurance and wear and tear.

Following the announcement, the new rates are now:

• 55p per mile for cars and vans (first 10,000 business miles)
• 25p per mile for cars and vans after 10,000 business miles
• 24p per mile for motorcycles
• 20p per mile for bicycles

While the main car and van rate has increased, the other mileage rates remain unchanged.

It’s important to remember that these rates only apply when using your own personal vehicle for business travel. Normal commuting or personal journeys cannot be claimed.

Mileage claims in Mighty:

Within Mighty, we’ve already rolled out the new 55p mileage rate so any new mileage claims will automatically use the updated amount.

Reclaiming mileage in Mighty is simple. Just enter your start and end destination, and we’ll automatically calculate:

• The business mileage
• Your reclaim amount
• The VAT reclaim too, based on your vehicle and engine type (if you’re VAT registered)

This helps ensure your mileage claims are accurate, compliant and quick to submit.