Rachel Reeves has confirmed that the 5p per passenger per business mile payment for employees giving colleagues a lift to work will remain in place. The Labour government recently updated the Approved Mileage Allowance Payment (AMAP) rates in response to rising fuel costs linked to the Iran war, but the car-sharing payment rule has not been altered.
HM Revenue & Customs (HMRC) clarified that passenger payments apply only when drivers carry fellow employees on journeys that are also work-related for those passengers. The fixed rate is 5p per passenger per business mile for cars or vans, with no relief available if payments are less than this amount or not received at all.
The new AMAP rates, announced by the Chancellor on 21 May 2026 and effective from 6 April 2026, increase the mileage allowance to 55p per mile for the first 10,000 business miles. Beyond that, the rate remains 25p per mile, except for National Insurance purposes where the 55p rate applies regardless of mileage.
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Rates for motorcycles and bicycles remain unchanged at 24p and 20p per mile, respectively. Meanwhile, the government has confirmed a forthcoming review of all mileage rates, to be announced in a future Budget.
Jon Stride, chair of the Association of Taxation Technicians' Technical Steering Group, welcomed the increase but noted it falls short of fully covering rising costs. He highlighted that if mileage rates had kept pace with inflation since 2011, they would be 68p per mile today — significantly more than the current 55p. Stride also expressed concern that the unchanged 25p rate for mileage beyond 10,000 miles does not adequately support employees who face the highest financial burden from driving extensive work distances.