Fuel Prices Just Jumped 20p: What It Means for Your 45p Mileage Claim

If you fill up for work, the pain at the pump in the last six weeks has been sharp. Average unleaded has climbed from around 132.8p in late February to 158.2p in mid-April. Diesel has gone from 142.4p to 191.5p. The RAC called it the biggest monthly increase on record for both fuels.

The cause is well-known: disruption in the Strait of Hormuz, which handles roughly a fifth of the world's energy shipments. Whatever happens next in the Middle East, the immediate effect on UK forecourt prices is already baked in for the foreseeable future.

Meanwhile, the HMRC approved mileage rate is the same 45p per mile it's been for fourteen years.

What the 45p rate is actually supposed to cover

The Approved Mileage Allowance Payments (AMAP) rate isn't just fuel. It's designed to cover all the costs of using a personal vehicle for business:

• Fuel
• Insurance (business use portion)
• Road tax (VED)
• MOT and servicing
• Tyres and wear-and-tear
• Depreciation

When 45p was set in 2011, unleaded averaged around 133p a litre. A typical car doing 40mpg cost roughly 15p per mile in fuel alone, leaving 30p to cover everything else. The rate felt generous.

At today's prices (158p unleaded, 191p diesel), the fuel portion of the same 40mpg car is now around 18p per mile. A 35mpg diesel van is closer to 25p. The "everything else" cushion inside that 45p has shrunk.

Why the 45p rate still usually beats actual costs

Here's the uncomfortable truth most self-employed drivers don't hear: even with a 40p jump in diesel prices, for most cars the 45p flat rate still pays you more than your real running costs.

Let's run the numbers for a realistic 2026 example.

Scenario: sole trader, 5-year-old diesel estate, 10,000 business miles a year

• Fuel at 191p/litre, 45mpg: around 19p/mile → £1,900
• Insurance (business class 1 portion): £650
• Road tax: £190
• Servicing and MOT: £450
• Two tyres a year: £220
• Depreciation (realistic, not list price): £1,000
• Total actual cost: £4,410 → 44.1p per mile

HMRC would pay you 45p × 10,000 = £4,500. Even in an expensive-fuel year, the 45p still edges ahead — but only just.

Now do the same sum for a petrol hatchback doing 50mpg: your actual cost is nearer 30p per mile, and the 45p rate pays you £1,500 more than it costs you to drive. That margin is the whole reason the mileage allowance exists.

And for electric vehicle drivers, the gap is even wider — fuel costs are a fraction of what they are for petrol or diesel, but HMRC still pays you 45p.

What this actually means for you in 2026/27

Three things follow from the maths above.

1. Track every mile. If your margin between HMRC's rate and your real cost has shrunk, you can't afford to miss journeys. Every business mile you forget to log is now, in real terms, closer to pure loss than it was five years ago.

2. Reconsider actual-cost method if you drive a thirsty van. For most drivers the 45p flat rate still wins. But if you run a large diesel van with heavy mileage at current fuel prices, or you've just had a major repair bill, running the actual-costs calculation might now be worth it. There's a full comparison here: Simplified Mileage vs Actual Costs: Which Saves You More?.

3. Don't forget the 10,000-mile threshold just reset. The new 2026/27 tax year began on 6 April. You're back on 45p for your first 10,000 business miles. If you were already into 25p territory by December last year, you've effectively had a pay rise on every business mile you drive between now and autumn.

Fuel duty and what happens in September

There's one more wrinkle. The 5p-per-litre fuel duty cut, originally a temporary 2022 measure, was extended again in the March 2026 Spring Statement. It's now due to expire at the end of August 2026. If the government lets it lapse and doesn't replace it with another extension, pump prices will jump another 5p — plus VAT, so closer to 6p at the till — on 1 September.

Whether that happens depends on what oil is doing in July. Worth watching if you're planning budget or thinking about vehicle changes.

What won't change

HMRC's 45p rate almost certainly won't move in response to any of this. The rate has survived a tripling of fuel prices since it was set, multiple Chancellors, and repeated calls from accountancy bodies to increase it. The Treasury's consistent line is that the rate is intended to be an approximate, averaged reimbursement rather than track actual costs.

In practice, that means the rate goes up only when it's politically expensive not to. Don't hold your breath.

The record-keeping angle (the bit HMRC actually cares about)

From 6 April 2026, Making Tax Digital for Income Tax is live for anyone with self-employment or property income over £50,000. Mileage records must be kept digitally. A paper notebook no longer cuts it if you're over the threshold, and even if you're under it, a paper-based system means reconstructing a year's worth of trips from memory in January — never a good plan.

For any journey you claim, HMRC expects to see: date, start and end location, business purpose, and distance. In a compliance check, they'll ask for each one individually.

You can track this manually in a spreadsheet if you're disciplined. Most self-employed drivers aren't — not through laziness, just through being busy and doing the actual work that pays the bills. The point of an automatic tracker is that the decision to record a journey is made for you the moment you start driving.

All Premium features free until 5th April 2027 (end of 26/27 tax year). KeptMiles tracks every business mile automatically, stores it digitally for MTD, and calculates your HMRC claim at the right rate — 45p, 25p, or both.

Bottom line

Fuel is expensive, HMRC's rate hasn't moved, and the margin between them is tighter than it was. The answer isn't to give up on mileage claims — it's the opposite. When every mile is worth more in relative terms, missing them costs more.

The self-employed drivers who come out of this year best won't be the ones shopping around for fuel deals. They'll be the ones who tracked every single business mile and put every one of them on their return.