Mileage Expenses

If you use your personal vehicle for business, you can claim tax relief for business journeys. HMRC lets you use fixed mileage rates instead of tracking every fuel or maintenance cost. This is called simplified expenses.

HMRC Approved Mileage Rates

HMRC sets fixed rates per mile to cover fuel, insurance, servicing, and general wear and tear.

• Cars and Vans: 55p per mile for the first 10,000 miles, then 25p per mile after that.
• Motorcycles: 24p per mile for all business miles.
• Bicycles: 20p per mile for all business miles.
• Passenger Payments: An additional 5p per mile, per passenger, can be claimed if you carry a fellow employee on a business journey.

Statutory Update for 2026/27:

Following an announcement by the Chancellor, the main HMRC approved mileage rate for cars and vans has increased from 45p to 55p per mile. This measure has been backdated to 6 April 2026 and remains strictly in effect for the entire 2026/2027 tax year. These rates apply to most self-employed individuals and business owners using their own private vehicles.

What Counts as Business Mileage

Business mileage is defined as any travel made fully and exclusively for business purposes. This includes:

• Visiting clients or customers.
• Travelling to suppliers or picking up stock.
• Going to business-related locations such as a bank or post office.

Ordinary commuting between your home and a permanent workplace does not qualify. You must keep a detailed mileage log that records the date, destination, business purpose, and the exact number of miles covered for each trip.

Mileage vs. Actual Costs

You usually have two options when claiming vehicle expenses, but you must choose one method per vehicle and stay consistent:

1. The Simplified Mileage Method: Claim a flat amount per mile using the HMRC rates outlined above. This is the most common option because it requires significantly less administrative record-keeping.
2. The Actual Costs Method: Claim the literal costs of running the vehicle, including fuel, insurance, repairs, servicing, and road tax. If you use this method, you must calculate the exact business-use percentage of the vehicle and apply it to your total outgoings.

You cannot use both methods for the same vehicle at the same time.

Electric Vehicles

Electric vehicles follow the exact same mileage rules under the simplified expenses system. The flat 55p and 25p rates apply to electric cars and vans; there are no separate or higher EV mileage rates under this structure.

If you use actual cost accounting instead, you can claim the business percentage of your specific running costs, such as public charging, electricity costs, and battery maintenance.

Leased or Company Vehicles

If you lease a vehicle and claim the lease payments and actual fuel costs through your business accounts, you are legally blocked from claiming simplified mileage rates for that same vehicle.

Key Points to Remember

• Mileage can be claimed at HMRC approved rates for qualifying business travel only.
• Cars and vans are rated at 55p per mile up to 10,000 miles, then 25p per mile thereafter.
• Motorcycles are rated at 24p per mile, and bicycles are rated at 20p per mile.
• You can either claim flat mileage rates or actual running costs, but you cannot combine both methods for the same vehicle.
• Electric vehicles follow the identical standard flat rates under the simplified expenses system.