Mileage Allowance for the Self-Employed: 45p & 25p

If you drive for work and you're self-employed, you can claim back the cost of those business miles against your profit. The simplest way to do it is the flat mileage rate: 45p a mile for the first chunk of business driving each year, then 25p after that.

This guide explains exactly how that works, who can use it, what counts as a business mile, and how to put the claim on your tax return. We've included a worked example with real figures so you can see the maths.

It's written for sole traders and partners running a UK business, the kind of work we do every day for sole traders, tradesmen and consultants and engineers.

What is the self-employed mileage allowance?

When you use a car, van or motorcycle for your business, HMRC lets you deduct the cost of that motoring from your profit. You have two ways to do it.

The first is the flat mileage rate, which HMRC calls "simplified expenses". You keep a record of your business miles and multiply them by a fixed pence-per-mile rate. That single figure is meant to cover everything: fuel, insurance, servicing, repairs, road tax and the wear on the vehicle.

The second is the actual cost method. You add up your real running costs for the year, work out the business proportion, and claim that. You can also claim capital allowances on the vehicle itself.

For most sole traders, the flat rate is far less hassle. You don't keep fuel receipts or split every bill. You just log the miles.

What are the 45p and 25p rates?

The flat rates are set by HMRC and have been at these levels for several years. They apply for the 2025/26 tax year.

The 10,000-mile band runs per tax year, not per vehicle and not per job. Once your business mileage for the year passes 10,000, every extra mile in a car or van is claimed at 25p rather than 45p.

These rates are meant to cover all the running costs of the vehicle. You can still claim separately for things the rate doesn't cover, such as business parking, toll charges and congestion charges. You can't claim parking fines.

Source: HMRC, Travel - mileage and fuel rates and allowances.

Who can claim the flat mileage rate?

Simplified mileage is for sole traders and partnerships that don't have a company as a partner. If you trade through a limited company, this scheme isn't for you. Company directors and employees use a slightly different system (the approved mileage allowance the company pays them), so the rules below are written for the self-employed.

There are two more conditions worth flagging.

First, you can't use the flat rate for a vehicle if you've already claimed capital allowances on it, or if you included the cost of buying it as a business expense. In plain terms, if you've already written down the purchase cost of the van against your profit, you have to stick with the actual cost method for that van.

Second, once you choose the flat rate for a particular vehicle, you have to keep using it for that vehicle for as long as it's in your business. You can't flip back and forth year to year. You get a fresh choice when you change vehicles.

A couple of vehicle types are excluded from the flat rate too, such as black cabs, hackney carriages and dual-control driving-instructor cars. Those are designed for commercial use and use the actual cost method instead.

Source: HMRC, Simplified expenses if you're self-employed: vehicles.

What counts as a business mile?

This is where people slip up, so it's worth being precise. A business mile is travel that is wholly and exclusively for the business. Typical examples:

• Driving to a customer's site, a job, or a client meeting.
• Travelling between two workplaces.
• A trip to a supplier, a wholesaler or the bank for business reasons.

What doesn't count is ordinary commuting. If you have a regular base you travel to, the journey from home to that base is private, not business. The same goes for any personal use of the vehicle, like the school run or the weekly shop.

If a journey is partly private and partly business, you only claim the business portion. The cleanest approach is to log each business trip as you go, with the date, the destination, the reason and the miles.

You can also claim other business travel on top of your vehicle mileage, like train or bus fares for business trips and the cost of business parking.

Mileage allowance or actual costs: which is better?

There's no single right answer. It depends on your vehicle and how you drive.

The flat rate usually wins when:

• Your vehicle is cheap to run, or older and already paid for.
• You don't want the admin of keeping every fuel and repair receipt.
• You'd rather have one simple, predictable figure.

The actual cost method can win when:

• You've bought an expensive van or car and want to claim capital allowances on it.
• Your running costs are genuinely high relative to your mileage.
• The vehicle is used almost entirely for business.

Here's the key trade-off. Once you've used the flat rate for a vehicle, you're locked into it for that vehicle. And if you claim capital allowances on a vehicle, you can't use the flat rate for it. So the decision is best made before you start claiming, ideally when you buy the vehicle.

If you'd like a quick view of the difference for your own numbers, our mileage calculator does the flat-rate maths for you in seconds.

Worked example: claiming mileage for the year

Illustrative example. Tom is a self-employed plumber and a sole trader. He uses his own van for jobs across his county. Over the 2025/26 tax year he logs 14,000 business miles. He hasn't claimed capital allowances on the van, so he's free to use the flat rate.

His claim splits at the 10,000-mile mark:

The maths: 10,000 x £0.45 = £4,500, plus 4,000 x £0.25 = £1,000, giving £5,500.

Tom also paid £180 in business parking during the year. Parking isn't covered by the flat rate, so he adds it on top. His total travel deduction is £5,500 + £180 = £5,680.

That £5,680 comes off his profit before tax. If Tom is a basic-rate taxpayer, the saving is roughly the deduction times his marginal rate, but the exact figure depends on his total profit and his National Insurance position for the year. The point is the deduction reduces the profit he pays tax on.

How do you record and claim it?

You don't send your mileage log to HMRC, but you must keep it. If they ever ask, a contemporaneous record is your evidence. Note, for each business trip: the date, where you went, why, and the miles.

You then put the figure on your Self Assessment tax return as part of your business expenses. If your turnover is below the VAT registration threshold you can use the simpler three-line accounts on the self-employment pages; otherwise you enter it under motor expenses.

The filing deadline for an online return is midnight on 31 January following the end of the tax year, with any tax due payable by the same date. So the 2025/26 return is due by 31 January 2027.

Source: HMRC, Self Assessment deadlines.

If the return side of this feels like a chore, that's exactly the kind of thing our Self Assessment service takes off your plate. Good bookkeeping through the year also means your mileage is already captured when the return is due, rather than a January scramble.

Common mistakes we see

In practice, the same handful of errors come up again and again:

• Claiming the commute. Home to a regular base is private travel, not a business mile.
• No records. A claim with no log is a claim you can't defend if HMRC asks.
• Mixing methods. Trying to claim the flat rate and capital allowances on the same vehicle isn't allowed.
• Forgetting the 25p band. Past 10,000 business miles, the car and van rate drops to 25p, not 45p.
• Switching to suit the year. Once you pick the flat rate for a vehicle, you keep it for that vehicle.

Want to make sure you're claiming every business mile correctly? Book a free 20-minute call with a Zmartly accountant and we'll check your mileage method, your records and your Self Assessment in one go. Talk to Zmartly.

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