Claiming Mileage and Vehicle Costs as a UK Tradesperson — Simplified Expenses vs Actual Costs (2026)

Method 1 — Simplified Expenses (Flat Mileage Rate)

The simplest way to claim vehicle costs is HMRC's "simplified expenses" flat mileage rate, sometimes called the approved mileage allowance. Instead of totting up every fuel receipt and repair bill, you record how many business miles you drive and multiply by a fixed pence-per-mile rate. The rate is the same as the long-standing HMRC approved mileage rates and has not changed 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 above 10,000
• Motorcycles: 24p per mile (no 10,000-mile step)

The crucial thing to understand is that this single rate is meant to cover everything to do with running the vehicle — fuel, servicing, insurance, repairs, breakdown cover, road tax and depreciation. Because the flat rate already includes all of that, you cannot also claim those running costs separately on top of the mileage. It is one or the other.

You can, however, still claim a handful of costs that the mileage rate does not cover. Business parking, tolls and congestion or clean-air-zone charges incurred on a business journey can be claimed in addition to the per-mile rate. (Parking fines and speeding tickets are never allowable — those are penalties, not business costs.)

One important condition: once you have used the simplified mileage method for a particular vehicle, you must keep using it for that vehicle for as long as you own it. You cannot start on mileage and later switch to actual costs for the same van. You can, though, use different methods for different vehicles.

Method 2 — Actual Costs (Capital Allowances + Running Costs)

The alternative is to claim the real cost of running the vehicle. Under this method you add up everything you actually spent — fuel, insurance, repairs, servicing, MOT, road tax, breakdown cover, valeting — and claim the business-use proportion of those costs. On top of the running costs you can also claim capital allowances on the vehicle itself, which is the mechanism for writing off the purchase cost against tax over time.

Capital allowances treat vans and cars differently. A commercial van used for business often qualifies for more generous treatment, and in many cases the full cost can be relieved more quickly. Cars, by contrast, are subject to CO2-based restrictions — the rate at which you can write the car down depends on its emissions, with low-emission and electric vehicles getting the most favourable treatment and higher-emission cars the slowest. The rules here are detailed and change frequently, so this is a point to confirm with your accountant for your specific vehicle.

The trade-off with actual costs is record-keeping. You must apportion private versus business use honestly — for example, if 80% of your mileage is for the business, you claim 80% of the running costs — and you must keep all the receipts to back it up. It is more work than the flat rate, but for an expensive van or a vehicle with high running costs, the deduction can be considerably larger.

Which Method Should You Choose?

There is no universally correct answer — it depends on the vehicle and how you use it.

• Simplified mileage tends to win for ordinary cars, moderate annual mileage, and anyone who values a quiet life on the paperwork. It is quick, predictable, and you do not have to keep a shoebox of receipts.
• Actual costs tends to win for vans, high-mileage operators, and expensive vehicles where the capital allowances and real running costs add up to more than the flat 45p/25p would give you.

A useful rule of thumb: if you run a costly van that does a lot of miles and drinks fuel, do the maths on both methods before deciding — actual costs often comes out ahead. If you run a reasonably economical car with average business mileage, simplified is usually the easier and perfectly competitive choice. Remember the catch: once you choose simplified mileage for a vehicle you cannot switch back and forth on that same vehicle, so make the decision deliberately when the vehicle first enters the business.

What Counts as Business Mileage?

Only business journeys can be claimed, so it pays to know where the line sits. Journeys that clearly count as business mileage include:

• Driving to a customer's job or site
• Trips to suppliers, builders' merchants and trade counters
• Travelling between two jobs in the same day
• Visits to quote or survey a potential job
• Trips to your accountant, the bank, or to buy tools and materials

The grey area is the journey from home. As a general rule, commuting from home to a regular, permanent workplace does not count as business mileage — that is treated as ordinary commuting, even for the self-employed. However, many tradespeople have no fixed or permanent workplace: they work from home as their base and travel to a different site every day. Where there is genuinely no permanent workplace, travel from your home base directly to varying job sites can usually qualify as business mileage.

The nuance matters. If you rent a yard or unit that you attend every day before heading out, the trip from home to that yard looks like commuting, while trips from the yard to sites are business. If your home is genuinely your business base and the sites change constantly, the home-to-site legs generally count. This "no fixed base" question is one of the most commonly misunderstood points in the trade, and a borderline case is worth running past your accountant rather than guessing.

Keeping a Mileage Log

Whichever method you use, you need evidence. For simplified mileage you must be able to show how many business miles you drove; for actual costs you need to justify the business-use percentage you applied. Either way, that means keeping a mileage log throughout the year. For each business journey record:

• The date of the journey
• The journey itself — start and destination
• The purpose (e.g. "site visit — Mrs Khan kitchen", "merchant — pipe fittings")
• The miles driven

A mileage-tracking app that uses your phone's GPS makes this almost effortless — it logs every trip automatically and lets you swipe to mark each as business or private. A simple notebook or spreadsheet works too, as long as you keep it up regularly rather than trying to reconstruct a year from memory the night before your tax return.

HMRC can ask to see your evidence, and poor record-keeping is the single most common reason mileage and vehicle claims get challenged. A reconstructed, estimated log is far weaker than a contemporaneous one. Treat the log as part of the job, not an afterthought.

Sole Trader vs Limited Company

How you actually claim depends on your business structure, and the difference catches a lot of people out when they incorporate.

Sole traders claim mileage (or actual costs) as a business expense on the self-employment pages of their Self Assessment tax return. The deduction reduces your taxable profit. You simply choose your method per vehicle as described above and record it on your return.

Limited company directors who use their own personal car or van for company business claim back Mileage Allowance Payments (MAPs / AMAP) from the company. These are paid to you tax-free at exactly the same approved rates — 45p per mile for the first 10,000 business miles and 25p above that, and 24p for motorcycles. The company gets a deduction for the payment, and you receive it without any income tax or National Insurance, provided you stay within the approved rates and keep a proper mileage log.

If instead the company owns the vehicle, the picture is completely different. A company-owned van or car that is also available for the director's private use generally triggers benefit-in-kind charges, with the company van benefit and car benefit (plus a separate fuel benefit if the company pays for private fuel) all potentially in play. These charges can be significant and depend on the vehicle type and emissions. This is a genuinely complex area — if you are thinking about putting a vehicle through a limited company, get specific advice on the benefit-in-kind position before you buy.

A Quick Word on VAT

If your business is VAT-registered, there is a separate VAT angle on fuel. You can reclaim the VAT on the fuel element of your business mileage, typically calculated using HMRC's advisory fuel rates. Where the vehicle also has private use, you may need to account for VAT via the fuel scale charge to reflect that private element. The VAT treatment of fuel and vehicles is fiddly and interacts with how you claim for income tax, so keep this on your radar but speak to your accountant to get it right rather than working it out from a blog post.

Quick Reference: HMRC Simplified Mileage Rates (2025/26)

Quick Reference: Simplified vs Actual Costs

Frequently Asked Questions

What is the HMRC mileage rate for 2025/26?

For cars and vans the approved rate is 45p per mile for the first 10,000 business miles in the tax year and 25p per mile for every business mile above that. Motorcycles are 24p per mile with no 10,000-mile step. These rates cover all running costs of the vehicle, so they cannot be combined with separate fuel or repair claims.

Can I claim mileage and fuel?

No — not on the same vehicle. If you use the simplified flat mileage rate, that rate already includes fuel along with servicing, insurance, repairs and depreciation, so you cannot also claim fuel costs on top. If you want to claim actual fuel costs you must use the actual-costs method for the whole vehicle instead. You can claim business parking, tolls and congestion charges on top of mileage, because those are not part of the running-cost rate.

Does driving to site from home count as business mileage?

It depends on whether you have a permanent workplace. Travel from home to a regular, fixed workplace is normally treated as ordinary commuting and does not count. But many tradespeople have no fixed base — they work from home and travel to a different site every day — and in that case travel from your home base directly to varying sites can usually qualify as business mileage. Because this turns on your specific circumstances, it is worth confirming a borderline case with your accountant.