Claiming Mileage and Van Costs — The Trade Business Guide (2026)

The Two Ways to Claim Vehicle Costs

There are two methods, and you have to pick one per vehicle. You can't mix and match for the same van or car in the same period, and once you've chosen the simplified mileage method for a particular vehicle you have to stick with it for as long as you own that vehicle. Choose carefully before you start claiming.

Method 1 — HMRC Simplified Mileage (Fixed Rate)

The simplified expenses method lets you claim a flat rate for every business mile you drive, instead of working out the actual running cost of the vehicle. The rates are set by HMRC and have been unchanged for years:

• Cars and vans: 45p per mile for the first 10,000 business miles in the tax year
• Cars and vans: 25p per mile for every business mile after 10,000
• Motorbikes: 24p per mile (no 10,000-mile threshold)

The flat rate is designed to cover everything — fuel, insurance, road tax, MOT, servicing, repairs and depreciation. That means if you use this method you cannot also claim those running costs separately. You just multiply your business miles by the rate. The big advantage is simplicity: you keep a mileage log and that's it, no fuel receipts or service invoices to total up. Remember the rule though — once you use simplified mileage for a vehicle you must keep using it for that vehicle until you replace it.

Method 2 — Actual Running Costs

The alternative is to claim the actual cost of running the vehicle, scaled to the proportion of your mileage that is business use. So if 80% of your total miles are business journeys, you can claim 80% of each of these:

• Fuel or charging
• Insurance
• Repairs and servicing
• Vehicle road tax (VED)
• MOT
• Breakdown cover, parking and other running costs

On top of the business proportion of those running costs, you can also claim capital allowances on the vehicle itself — effectively writing down a portion of the purchase price against your profits. This is the key reason the actual-cost method often wins for a van. It is more paperwork: you have to keep every receipt and work out your business-use percentage, but for a high-cost, high-mileage commercial vehicle the total claim can be considerably larger than the flat mileage rate would give you.

Which Method Suits a Van — and Which Suits a Car?

There's no universal answer, but there are clear patterns for tradespeople. The decision usually comes down to how expensive the vehicle is to run and how much you drive.

• High-mileage car: simplified mileage is usually simpler and often more generous. A car that does 20,000 business miles a year generates a 45p/25p claim worth thousands, with almost no record-keeping beyond the log.
• Work van: actual costs often win. Vans are thirsty, expensive to insure and service, and the capital allowance on the van itself can be substantial. Add up fuel, insurance, repairs, road tax and the write-down and the actual-cost figure frequently beats the flat rate.
• New or expensive vehicle: actual costs let you claim capital allowances on the purchase, which the mileage method does not. For a brand-new van this can tip the balance decisively.
• Older, cheap-to-run vehicle: simplified mileage tends to come out ahead, because there isn't much actual cost or capital value left to claim.

The honest approach is to total both ways for a full year before you commit, because the simplified method locks you in for the life of the vehicle. Many trades run the numbers with their accountant when they buy a vehicle and then stick with the better method.

What Counts as Business Travel — and What Doesn't

You can only claim for business journeys, and HMRC draws a firm line between business travel and what it calls ordinary commuting. Get this wrong and you risk over-claiming, which is exactly what HMRC looks for on a check.

The core rule: travel from home to a permanent workplace is ordinary commuting and is not allowable. If you have a fixed yard, unit or office that you attend regularly, the home-to-yard leg generally can't be claimed. What is allowable:

• Travel to a temporary site — a customer's property or a job you'll only be at for a limited time
• Travel between jobs during the working day
• Trips to suppliers, the merchant, the bank, or to quote a new job

The good news for most trades is that the majority of your driving genuinely is business travel. If you have no fixed base — you work from home and drive straight out to whichever site you're on that day — then home-to-site journeys are usually allowable, because each site is a temporary workplace rather than a permanent one. This is the typical position for a self-employed plumber, electrician or builder with no commercial premises, and it means most of the day's mileage counts.

Keeping a Mileage Log HMRC Will Accept

Whichever method you use, you need to record your business mileage. For the simplified method the log is the whole basis of your claim; for the actual-cost method it's how you prove your business-use percentage. A vague estimate at the end of the year is the single most common reason a vehicle claim falls apart under scrutiny.

A log HMRC will accept records, for each business journey:

• Date of the journey
• Journey — start point and destination
• Purpose — the customer or reason (e.g. "site visit, 14 Oak Road" or "collect materials, Travis Perkins")
• Miles driven for that journey

Record it as you go, not from memory months later. A phone app, a spreadsheet or even a notebook in the van all work, as long as it's contemporaneous and consistent. Keep your records for at least the period HMRC can go back over — generally five years after the 31 January submission deadline for the relevant tax year. The same goes for fuel and repair receipts if you're on the actual-cost method.

Sole Trader vs Limited Company

How you claim depends on how your business is structured. The mileage figures are the same, but the mechanism differs.

As a sole trader, the vehicle cost is a business expense on your Self Assessment return. You choose simplified mileage or actual costs per vehicle as described above, and the claim reduces your taxable profit.

If you run a limited company and use your own personal vehicle for company business, you claim through the Approved Mileage Allowance Payments (AMAP) scheme. The company pays you a tax-free mileage allowance at the same headline rates — 45p per mile for the first 10,000 business miles and 25p after that (24p for motorbikes). It's a clean way for a director to be reimbursed without triggering a benefit-in-kind charge. The rules around a company-owned van or car are different again and bring company car/van tax into play, so that's worth a conversation with your accountant before you buy a vehicle through the company.

Quick Reference: Claiming Vehicle Costs UK 2026

Note: simplified mileage locks you in for the life of that vehicle, and you can't combine it with separate running-cost or capital-allowance claims on the same vehicle. When in doubt, total both methods for a full year and check with your accountant.