Approved mileage allowance payments

Approved mileage rates are the maximum payment an employer can make to an employee, or a self-employed individual can claim for making business journeys in their own vehicle without incurring an income tax liability. Similar rules apply for the purposes of national insurance contributions (NIC).

In May 2026, the government announced a 10p per mile increase in the rate applying for 2026/27 for cars and vans:

• for the first 10,000 business miles for income tax; an
• for all business miles for NIC. 

This took the rate from 45p to 55p per mile.

In an announcement made ahead of budget 2026, the government confirmed a further 10p per mile increase in the rate applying for cars and vans for each business mile in excess of 10,000 business miles. In this instance the rate is increased from 25p per mile to 35p per mile.

The government also confirmed that the changes to the rates would be permanent.

Separate rates apply for motorcycles and bicycles, and there is also a rate for passenger payments. No changes have been announced to these rates.

Further information:

• How approved mileage rates may be used

National living and national minimum wage

The government has announced increases in the national living wage (NLW) and the national minimum wage (NMW) from 1 April 2027 as set out in the table below. 

Employer immigration charges

Employer related immigration charges which are paid by employers when sponsoring a worker under the skilled worker route will be exempted from income tax. This measure will apply to fees for a certificate of sponsorship or immigration skills charge paid on or after 28 October 2026.

This is a welcome update for those dealing with globally mobile employees and the complexities of bringing talent into the UK, though raises questions about historical periods and other related costs.

Updates to benchmark scale rates and overseas scales rates

The government will increase benchmark scale rates applicable in the UK, as well as the overseas scale rates. The benchmark rates are the maximum amounts that can be paid by employers to employees for business travel and subsistence without requiring actual expense receipts.

Current rates:

• Breakfast rate - £5
• One meal (5 hour rate) - £5
• Two meal (10 hour rate) - £10
• Late evening meal rate - £15

The current qualifying conditions are explained at in HMRC’s internal manual EIM05231.

New rates from 6 April 2028:

• 5-hour+ rate £20
• 10 hour+ rate £60
• 24 hour+ rate £75

A new tiered approach will be introduced to overseas scale rates with destinations allocated to a tier rather than the current system which is based on specific rates for more than 200 destinations.

The reform will also aim to bring the rates up to date to reflect the current costs of international business travel.

Enterprise management incentives

Enterprise management incentives (EMI) are tax-advantaged share schemes designed as a retention tool to aid employers retain employees of small, high-growth businesses.

Enterprise management incentives 2 (EMI2), formerly known as company share option plan, is available to all companies regardless of size and sector. It is intended for use once a company has surpassed the EMI eligibility limits or if the business does not qualify for EMI.

From 6 April 2027 the following changes will take place:

• EMI2 individual option limit will be increased from £60,000 to £120,000.
• The interaction between the EMI and EMI 2 individual options limits will be removed so that the schemes can operate independently.
• The maximum period for exercising EMI2 options while being able to retain tax advantages will increase from 10 to 15 years. For EMI the equivalent period is 10 or 15 years as per the EMI option agreement.
• The period for certain tax-advantaged and non-tax advantaged shares and share options reserved by third parties to be excepted from the disguised remuneration rules will also be extended to 15 years.
• The exception for employee ownership trusts (EOTs) in the EMI rules will be extended to companies arranging to become controlled by an EOT.
• The EMI exercise window following disqualifying events will be extended from 90 to 180 days to preserve tax advantaged status.
• Companies will no longer be required to submit a notification to HMRC when granting EMI options, but must report any grants on the end of year return.