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Private hire drivers could benefit as Government announces higher mileage tax allowance
Private hire drivers could benefit from higher mileage tax allowances after the Government announced plans to increase the rate available for business journeys exceeding 10,000 miles annually.
HM Treasury confirmed on Monday 26 October that the higher-mileage rate would rise from 25p to 35p per mile, alongside plans to make the existing 55p allowance for the first 10,000 miles permanent.
The announcement forms part of a package of measures ahead of Wednesday’s Budget, aimed at reducing costs for people who depend on their vehicles for work.
The Government estimates that around three million employees and self-employed workers could benefit from the mileage changes.
For eligible self-employed private hire drivers using HMRC’s simplified expenses system, the higher rate could increase the amount deductible from taxable business profits.
An additional 10p per mile would represent £1,000 in extra allowable expenses for a driver recording 10,000 qualifying business miles above the annual threshold. The actual tax saving would depend on individual circumstances.
However, HMRC excludes vehicles designed for commercial use, including purpose-built black cabs and hackney carriages, from the simplified mileage scheme. Drivers using those vehicles must calculate allowable motoring expenses through the applicable alternative rules.
The first 10,000-mile rate increased from 45p to 55p earlier this year, with retrospective effect from 6 April 2026.
The Government has not yet confirmed when the proposed increase to 35p will take effect.
HMRC’s published guidance continues to show 25p per mile for journeys exceeding 10,000 miles. Further details are expected as the Chancellor delivers the Budget on Wednesday 28 October.
