Expenses Policy Changes for 2027 and 2028 - Mileage, Subsistence and Claims

The Budget on 28 October 2026 changed three things that sit at the heart of most travel and expenses policies: the mileage rate for high-mileage drivers, the subsistence rates for day travel, and how employees claim tax relief on costs you do not reimburse.

The changes arrive in two stages, April 2027 and April 2028. This guide covers what each one means and what your policy should say.

What Changes and When

Change	Current position	New position	From
Mileage rate, cars and vans, first 10,000 business miles	55p	55p (no change)	-
Mileage rate, cars and vans, over 10,000 business miles	25p	35p	6 April 2027
Subsistence benchmark scale rates	Meal-based rates	£20 over 5 hours, £60 over 10 hours, £75 over 24 hours	6 April 2028
Overseas scale rates	Country-by-country rates	Simplified tiers linked to the new UK rates	6 April 2028
Claiming unreimbursed expenses over £2,500	Self Assessment required	Can be claimed through PAYE	April 2028

The measures are set out in the government's Budget 2026 overview of tax legislation and rates.

Mileage Over 10,000 Miles Rises to 35p

From 6 April 2027, the approved mileage rate for employees using their own car or van rises from 25p to 35p a mile once they pass 10,000 business miles in the tax year. The change also applies to the matching National Insurance disregard.

The first 10,000 miles stay at 55p, the rate that has applied for 2026 to 2027. Motorcycles stay at 24p, bicycles at 20p and passenger payments at 5p a mile, as listed on HMRC's mileage rates page.

What to change in your policy

• Update the rate table, and say whether you will pay the full approved rates or a lower rate.
• Make sure your claims system tracks each employee's cumulative business miles from 6 April, so the higher rate starts at the right point.
• Explain that payments above the approved rates are taxable, and that employees paid less can claim tax relief on the difference.
• Keep the definition of business travel clear, since ordinary commuting to a permanent workplace never qualifies.

Company car drivers are not covered by these rates. Their fuel is reimbursed at HMRC's advisory fuel rates, so keep the two rate tables separate in the policy.

New Subsistence Day Rates from April 2028

From 6 April 2028, HMRC's benchmark scale rates for day subsistence will be replaced with three simpler rates: £20 for travel of more than 5 hours, £60 for more than 10 hours and £75 for more than 24 hours. Overseas rates will move to a tiered system linked to the new UK rates.

Employers do not have to use the benchmark rates, and many reimburse actual receipted costs instead. If you do use them, you still need a checking system to make sure payments are only made for qualifying business journeys.

What to change in your policy

• Decide whether to adopt the new day rates, keep reimbursing actual costs, or offer both.
• Replace any meal-based allowance tables with the new rates from April 2028.
• Write down your checking system, including who approves claims and how you sample them.
• Review any bespoke scale rates agreed with HMRC, as these may need to be revisited.

Employees Claiming Expenses Through PAYE

Employees can claim tax relief on work costs their employer does not reimburse, such as professional subscriptions or uniform cleaning. At present, anyone claiming more than £2,500 has to file a Self Assessment return.

From April 2028 that threshold is removed, so more employees will claim through PAYE instead. Expect more questions from staff about what the business pays for and what they can claim themselves.

A clear policy helps here. It should list what you reimburse, what you do not, and where employees can find HMRC's guidance on claiming relief for the rest.

A Checklist for Your Travel and Expenses Policy

• Mileage rate table updated for 6 April 2027, with cumulative mileage tracking.
• Separate rates for company car drivers using advisory fuel rates.
• Subsistence approach confirmed for April 2028, with the new day rates if used.
• A written checking and approval process for scale rate payments.
• A list of reimbursable and non-reimbursable costs.
• Receipt and record-keeping rules, including how long claims are kept.
• Links to your anti-bribery and hospitality rules for client entertaining.

Our round-up of what the Budget 2026 changes for employers covers the other measures, including company vehicle charges and the April 2027 minimum wage rise.

Travel and Expenses Policy Writers

Policy Pros writes travel and expenses policies with current HMRC rates, approval matrices and checking procedures, and lease car policies for company car fleets. We can update your existing policy for both the 2027 and 2028 changes now, so it does not need rewriting twice.

If your expenses policy still quotes 45p a mile, contact us for a free quote, or call 020 3951 2875.