What is the HMRC mileage rate?

55p a mile for the first 10,000 business miles in a car or van and 25p a mile after that. It rose from 45p on 6 April 2026, the first change to the first tier since 2011. It is meant to cover fuel, wear, insurance and depreciation together.

Is the HMRC rate more than a mile actually costs?

On fuel alone, yes, by a wide margin. The rate is designed to cover everything: fuel, servicing, tyres, insurance, tax and depreciation. Compared against fuel alone it looks generous, and compared against total cost of ownership on a new car it usually is not.

What is the advisory fuel rate for?

Reimbursing fuel only, in a company car, where the employer is not covering everything. It is much lower than the approved mileage rate because it excludes wear, insurance and depreciation entirely.

Which is cheapest per mile?

Electric, charged at home, by a distance that no petrol or diesel car closes. Charged on a public rapid charger the same car costs about the same as a petrol equivalent, which is why where you charge decides the answer rather than what you drive.

Running costs

What a mile costs

Fuel only, at today's prices, across seven segments and three fuels. Then the same mile as HMRC prices it, which is a very different number and a different question.

16.9p

Family hatchback, petrol

Department for Energy Security and Net Zero, Weekly road fuel prices (as of 31 August 2026)

7.8p

The same car, electric, charged at home

Ofgem, Energy price cap unit rates and standing charges (as of 1 July 2026)

55p

HMRC approved mileage rate, first 10,000 miles

HM Revenue and Customs, Travel: mileage and fuel rates and allowances (as of 21 May 2026)

Checked on 7 September 2026.HM Revenue and Customs, Travel: mileage and fuel rates and allowances (as of 21 May 2026)

How much does a mile cost to drive?

On fuel alone, 16.9p for a petrol family hatchback and 7.8p for the electric equivalent charged at home. HMRC reimburses 55p, because that figure is meant to cover wear, insurance and depreciation as well.

The two numbers answer different questions. Fuel cost per mile tells you what a journey adds to your outgoings today. The HMRC rate is a proxy for what the mile costs the car over its life, which is a much larger figure and one nobody sees on a receipt.

Fuel cost per mile, by segment

Pence per mile on fuel alone at 161.61p unleaded, 183.49p diesel and 26.11p a kWh at home
Segment	Petrol	Diesel	Electric, home
City car	15.0p	15.1p	7.4p
Supermini	16.3p	13.4p	7.3p
Family hatchback	16.9p	15.2p	7.8p
Estate	17.4p	15.6p	8.1p
Medium SUV	18.9p	15.6p	8.1p
Large SUV	20.6p	18.4p	10.0p
Executive saloon	18.0p	16.0p	7.3p

The three official rates, and what each covers

HMRC rates that price a mile, and what is inside each one
Rate	Amount	What it covers
Approved mileage allowance, first 10,000 business miles	55p	Fuel, servicing, tyres, insurance, tax and depreciation, in your own car.
Approved mileage allowance, above 10,000 miles	25p	The same list, on the basis that the fixed costs are already covered.
Advisory fuel rate, petrol 1401cc to 2000cc	17p	Fuel only, in a company car, from 1 September 2026.
Advisory electricity rate, home charging	7p	Electricity only, in a company electric car charged at home.

What fuel cost per mile leaves out

Depreciation, which on a new car is usually the largest single cost of every mile and never appears on a receipt.
Insurance and vehicle excise duty, which you pay whether the car moves or not.
Servicing, tyres and the repair that arrives unannounced.
The cost of the money, if the car is on finance.

That is why the HMRC rate is several times the fuel figure. It is not generosity, it is a different definition of what a mile costs.

Common questions

What is the HMRC mileage rate?: 55p a mile for the first 10,000 business miles in a car or van and 25p a mile after that. It rose from 45p on 6 April 2026, the first change to the first tier since 2011. It is meant to cover fuel, wear, insurance and depreciation together.
Is the HMRC rate more than a mile actually costs?: On fuel alone, yes, by a wide margin. The rate is designed to cover everything: fuel, servicing, tyres, insurance, tax and depreciation. Compared against fuel alone it looks generous, and compared against total cost of ownership on a new car it usually is not.
What is the advisory fuel rate for?: Reimbursing fuel only, in a company car, where the employer is not covering everything. It is much lower than the approved mileage rate because it excludes wear, insurance and depreciation entirely.
Which is cheapest per mile?: Electric, charged at home, by a distance that no petrol or diesel car closes. Charged on a public rapid charger the same car costs about the same as a petrol equivalent, which is why where you charge decides the answer rather than what you drive.