Rachel Reeves has confirmed that the 5p per passenger per business mile rule for drivers giving colleagues a lift to work remains unchanged. The Labour Party government announced new fuel advisory rates amid the impact of the Iran war, but left this rule untouched.
HMRC confirmed after Ms. Reeves' announcement that passenger payments for cars and vans are still in place. According to HMRC, the rule applies to payments of 5p per passenger per business mile for carrying fellow employees on journeys that are also work journeys for them. Only payments specifically for carrying passengers count, and there is no relief if you receive less than 5p or nothing at all. The charge is based on the car's price for tax purposes, normally the list price, multiplied by an appropriate percentage based on CO2 emissions and fuel type.
AMAP Rate Increase
On 21 May 2026, the Chancellor announced that from 6 April 2026, the Approved Mileage Allowance Payment (AMAP) rate for employees using their own cars or vans for business travel would increase to 55p per mile, up from 45p per mile, for the first 10,000 business miles travelled per year. Business mileage after 10,000 miles will remain at 25p per mile, except for National Insurance purposes, which will be at 55p per mile rather than the previous 45p per mile, regardless of mileage.
No Changes for Motorcycles or Bicycles
There has been no change to the rates for motorcycles or bicycles. These will remain at 24p and 20p respectively. Passenger payments for employees' car sharing will stay at 5p per passenger per business mile.
The government has stated that they will conduct a review of all rates, which will be set out at a future Budget.
Industry Reaction
Jon Stride, chair of the Association of Taxation Technicians' Technical Steering Group, said: "The increase to 55p per mile is welcome and long overdue. However, a 10p increase after 15 years still does not fully reflect how much costs have risen since 2011. Had mileage rates increased in line with inflation, they would be 68p today, an increase of 23 pence."
He added: "It is particularly disappointing that the 25p rate for mileage over 10,000 miles has been left untouched. Those employees who drive the greatest distances for work are often the ones under the greatest financial pressure from rising motoring costs."
