Miles and miles
For many business owners and employees travel is an essential part of their business function. This is an update on travel expenses!
Mileage allowance
First the good news, from 6th April 2026 the approved mileage allowance for cars and vans has increased from 45p per mile to 55p per mile for the first 10,000 business miles in a tax year. Any miles in excess of 10,000 per tax year will still be subject to a lower rate of 25p per mile. These rates apply to all cars regardless of how they’re powered – diesel, petrol or electric.
This is the first increase to the approved mileage allowance since April 2011. With increases to fuel costs and repairs for wear and tear on vehicles, particularly over the last five years (potholes have a lot to answer for), this increase will be welcome.
The approved mileage allowance is applicable to company directors using their own vehicles for business journeys, sole traders and employees.
Travel to and from a permanent place of work is not deemed as business travel by HMRC, so you can’t claim the mileage allowance for getting to your office. However, if your first appointment is with a client or customer, the mileage from home to that appointment can be claimed.
This only applies for occasional visits to clients, if you’re contracted to work at a client’s premises for a period of more than 24 months, that becomes a permanent place of work as defined by HMRC, so you can’t claim the mileage from home to the place you’re working, even if it’s not your company’s main location.
If expense claims at the old rate have already been made the additional 10p per mile can be claimed and backdated to any mileage expenses claimed since April.
Electric cars
If your business buys (including hire purchase and PCP agreements) a brand-new fully electric car, you can deduct 100% of the vehicle’s cost against your taxable profits in the period the car is delivered to you. If you lease it, monthly rental costs are allowable business expenses. Employers can reduce Class 1A National Insurance contributions when providing an EV through a salary sacrifice scheme.
Your employees benefit from a low Benefit in Kind (BiK) tax on the car also. Fully electric cars have zero tailpipe emissions, so they sit in the lowest tax bracket. The electric car BiK rate in the UK is 4% of the car’s list price, while a high-emission petrol car can be taxable at up to 37%.
Electric cars are subject to road tax (Vehicle Excise Duty), the previous zero-emission exemption has ended in April 2025. For current road tax details, check GOV.UK Vehicle Tax Guidance.
Business travel expenses
If you’re travelling on business, all reasonable expenses for accommodation, food, etc can be claimed as expenses. However, HMRC have the view that you eat to live not for your trade, so you may be questioned about expenses for dinner at the most expensive restaurant in town!
If you’re entertaining clients, that bill should be claimed as a separate expense, being considered entertainment. There’s no tax relief on entertainment of clients, while subsistence costs are subject to tax relief.
Safe travels!
