New mechanism for calculating AfC mileage reimbursement

Background 

NHS staff who use their own vehicles for the purpose of work are entitled to reimbursement of travel costs. In 2011/12, mechanism was introduced that used motoring data published by the Automobile Association (AA) to calculate the costs of motoring for the average car. However, in 2014 the AA ceased publishing that data and since then the current mechanism has only reacted to changes in fuel prices, thereby not taking into account changes to other standing and running costs that make up the cost of motoring and are affected by inflation and market costs.  

This led to the NHS Staff Council being given a mandate from the Department of Health and Social Care (DHSC) to renegotiate a new mechanism to calculate the reimbursement rates for AfC NHS staff that must be sustainable for the longer term and be able to respond to fluctuations in market costs.    

Negotiations  

A joint negotiations group was established to fulfil the mandate and has spent over a year in negotiations exploring approaches. The group has undertaken a comprehensive review of available data and explored multiple options for establishing a new, fair, and sustainable reimbursement mechanism.  

The negotiation group reached a final recommendation in December 2025 that they believe is the best that can be achieved through negotiations to provide a fair framework for reimbursement of work-related travel costs. This has meant taking account of service needs, particularly in the light of the shifts in the NHS 10 Year Health Plan, improving productivity, recruitment and retention issues related to the current mechanism, and the ongoing challenging financial climate. 

Outcome 

Following a consultation period with employers and trade union members, the recommendations were submitted to the NHS Staff Council and Minister of State (Department of Health and Social Care) and were accepted in full in March 2026.  

The new mechanism changes cover four key areas:

Implementation 

The new mechanism will be implemented from the 1 June 2026 in a phased approach.  

Timeline for the changes: 

Key dates for changes: 

• From 1 June 2026, the standard rate will increase to 0.59p (<3,500), and the drop-down rate will increase to 0.36p (>3500 miles).  

• From 1 July 2026, the dropdown rate will increase from 3,500 miles to 4,500 miles per annum.  

• In November 2026, the mechanism will be reviewed using October 2026 CPI. If this triggers a change, the new rate of reimbursement will apply from 1 February 2027.  

• From 1 April 2027, the mileage counter reset will change from 1 July to 1 April.

Next steps  

Electronic Staff Record (ESR) colleagues have received detail of these changes and have confirmed that the ESR system will be updated to reflect these changes, and a user notice will be published. 

Section 17 will be updated on 1 June 2026 to incorporate Annex 12 of the NHS Terms and Conditions of Service Handbook and will reflect the new mechanism and rates of reimbursement. A NHS TCS Handbook advisory notice will be published to detail the changes. 

Existing local arrangements 

Where local partnerships of employers and trade unions have agreed alternative arrangements to the provisions in Section 17 of the NHS TCS Handbook, it is not the intention that these new arrangements replace any local agreement. However, local partnerships are encouraged to review their existing local agreements in light of these changes.  

Further information: 

• Read the NHS Staff Council joint statement.
• The mileage allowance FAQs will be updated to reflect the new mechanism in the coming weeks.  
• Section 17 of the NHS Terms and Conditions of Service Handbook will be updated on 1 June 2026.