What is a Section 278 Agreement?

A Section 278 Agreement is a legal agreement between a developer and a highway authority to carry out highway works.

Driving Change: The Government’s Mileage Increase Explained

The Government’s decision to increase the Approved Mileage Allowance Payment (“AMAP”) rate from 45p to 55p per mile for the first 10,000 business miles marks the first substantive uplift in more than a decade. The previous 45p rate had remained unchanged since 2011, despite sustained increases in fuel prices, insurance costs, vehicle maintenance expenses and general inflationary pressures affecting employees who use their own vehicles for work purposes.

The revised rate, which applies retrospectively with effect from April 2026, is intended to better reflect the true cost of business travel undertaken by employees. Employers should now review and update their mileage and expenses policies promptly to ensure payroll systems, reimbursement processes and employee communications accurately reflect the new statutory position. Businesses may also need to consider whether backdated payments are required for mileage already reimbursed since April 2026.

Whilst some employers may consider reimbursing mileage at rates above the Government-approved thresholds in response to continuing increases in motoring costs, caution should be exercised. Any reimbursement exceeding the approved AMAP rates may create a taxable benefit in kind, potentially resulting in additional tax and National Insurance liabilities for both employer and employee. For that reason, increasing mileage reimbursement above the approved rates is not always the most commercially or tax-efficient solution.

Where employee travel costs continue to rise despite the increase, employers may instead wish to explore alternative measures to reduce unnecessary travel expenditure. Practical options include adopting more flexible and agile working arrangements, increasing reliance on remote meetings, encouraging greater use of public transport, and promoting car-sharing initiatives. Such measures may not only reduce costs but also support wider sustainability and employee wellbeing objectives.

About Jon Dunkley

Jon Dunkley is a Partner at Wollens and heads up the firm’s Regulatory Department. Based at our North Devon office, Jon is a highly experienced solicitor with a broad commercial and regulatory practice, supporting businesses, professionals and senior employees across a wide range of legal issues.