From 6 April 2026, a self-employed person using simplified expenses can claim 55p a mile for the first 10,000 business miles in a car or van, up from 45p, and 25p for every mile after that [1] [2]. HMRC's own research found that only 28% of self-employed vehicle users were using the flat rates, and that 43% were even aware of them [3].
The increase was announced on 21 May 2026 and backdated to the start of the 2026-27 tax year, the first change to the headline rate since 2011 [4] [5]. In IPSE's example of a sole trader driving 6,000 business miles a year, the claim rises from £2,700 to £3,300 [6].
Mileage is one of the largest expenses in many one-person businesses, yet it sits on a set of rules that are easy to misapply. The choice between the flat rate and actual costs is locked in for the life of each vehicle, a single capital allowance claim closes off the flat rate for good, and the line between business travel and commuting decides whether any claim is allowed at all.
This guide explains how mileage claims work for sole traders and partnerships, how the two methods compare, what counts as a business journey, how non-April year ends are split across the old and new rates, which records HMRC expects, and what changes when the business takes on its first employee.
Key takeaways
- Sole traders and partnerships without a company partner can claim 55p a mile for the first 10,000 business miles and 25p thereafter in a car or goods vehicle, and 24p a mile on a motorcycle, from 6 April 2026 [1] [2].
- The flat rate replaces fuel, insurance, servicing, repairs, vehicle tax, MOT and depreciation, but parking, tolls and congestion charges for business journeys are claimed on top [2].
- Once the flat rate is used for a vehicle, it must be used for as long as that vehicle stays in the business, and it is never available for a vehicle on which capital allowances have been claimed [1] [2].
- Travel between home and a fixed place of work is not deductible, although genuinely itinerant traders can treat home as their base [7] [8].
- Businesses whose accounting year does not end on 5 April must split their mileage between the 45p and 55p rates by tax year [2] [4].
- Records must be kept for at least 5 years after the 31 January filing deadline for the tax year concerned [9].
How self-employed mileage claims work
A self-employed person pays income tax and Class 4 National Insurance on business profits, so every allowable expense reduces the figure those charges apply to [10] [11]. Vehicle costs are allowable only to the extent that they relate to business use, and the business share must be identified either by a flat rate per mile or by apportioning actual costs [12].
Two ways to claim vehicle costs
GOV.UK sets out two routes. The first is to claim the business proportion of actual running costs, such as fuel, insurance, repairs, servicing, vehicle tax and breakdown cover, together with capital allowances on the vehicle itself [12]. The second is a flat rate for each business mile, known as simplified expenses, which takes the place of those running costs and of capital allowances [1] [13].
Simplified expenses are optional. GOV.UK states that a business "can decide if it suits" it, and HMRC's manual confirms there is no income limit on who may use them [13] [14].
Who can use the flat rate
The flat rate is available to sole traders and to partnerships where none of the partners is a company. Limited companies and partnerships involving a limited company cannot use it [13] [14]. A director of a limited company is an employee for tax purposes and falls under the separate approved mileage allowance payment rules instead [15].
The flat rate also requires that the business is not using the £1,000 trading allowance. GOV.UK is explicit that expenses cannot be claimed where the trading allowance is used instead [10] [16]. For a trader whose only significant cost is mileage, the flat rate overtakes the trading allowance at a little under 2,000 business miles in a car.
From 6 April 2027 the trading allowance rises from £1,000 to £3,000, and the trading income threshold for reporting through Self Assessment rises to £3,000 with it [28].
The simplified mileage rates for 2026-27
The table sets out the flat rates per business mile for the 2026-27 tax year, against the rates that applied up to and including 2025-26 [1] [2].
| Vehicle | First 10,000 business miles | Each mile over 10,000 | Up to 5 April 2026 (first 10,000) |
|---|---|---|---|
| Cars and goods vehicles | 55p | 25p | 45p |
| Motorcycles | 24p | 24p | 24p |
The rate above 10,000 miles changes next. From 6 April 2027 simplified mileage for cars and goods vehicles above 10,000 business miles rises from 25p to 35p a mile, with the first 10,000 miles still at 55p [28].
Bicycles have an approved rate of 20p a mile for employees, but they are not one of the vehicles covered by the self-employed flat rate [5] [2]. Cars designed for commercial use, such as black cabs and dual-control driving instructor cars, are also excluded [2].
What the flat rate covers
HMRC's manual lists the costs the mileage rate replaces: fuel, oil, servicing, repairs, insurance, vehicle excise duty, MOT and depreciation [2]. None of these can be claimed separately for a vehicle on the flat rate, because that would count the same cost twice [1].
Some costs sit outside the rate. Tolls, congestion charges and parking incurred solely for business remain deductible in addition, as do train fares, bus fares and other travel that does not use the vehicle [2] [1]. Fines and penalty charges are never allowable [12].
| Cost | Vehicle on the flat rate | Vehicle on actual costs |
|---|---|---|
| Fuel, oil, servicing and repairs | Included in the rate | Business share claimed |
| Insurance, vehicle tax and MOT | Included in the rate | Business share claimed |
| Purchase cost of the vehicle | Included in the rate | Capital allowances |
| Business parking, tolls and congestion charges | Claimed in addition | Claimed in addition |
| Parking fines and penalties | Not allowable | Not allowable |
Sources: HMRC Business Income Manual BIM75005 [2] and GOV.UK travel expenses guidance [12].
Passengers and multiple vehicles
The number of people in the vehicle does not change the rate [2]. Employees can receive 5p per passenger per business mile for carrying colleagues, but self-employed taxpayers "are not able to claim additional relief for carrying passengers on business journeys" [5] [4].
The method is chosen vehicle by vehicle. GOV.UK states that a business does not have to use flat rates for all its vehicles, so a trader can keep an older van on actual costs while using the flat rate for a car bought later [1]. The 10,000-mile point applies to cars and goods vehicles used in the business during the tax year, so the business miles across them should be tracked together [2].
Worked examples of a flat-rate claim
The arithmetic is simple, but the step-down at 10,000 miles and the split by tax year are where claims usually go wrong. All the examples below use the 2026-27 rates [1].
A sole trader below and above 10,000 miles
A self-employed surveyor drives 6,000 business miles in a car during the 2026-27 tax year. In this example the allowable expense is 6,000 miles at 55p, or £3,300, against £2,700 at the old 45p rate [1] [6].
GOV.UK's own example takes 11,000 business miles: 10,000 miles at 55p is £5,500 and the remaining 1,000 miles at 25p is £250, giving £5,750 [1]. The table extends the same example to other mileages.
| Business miles in the tax year | Miles at 55p | Miles at 25p | Allowable expense |
|---|---|---|---|
| 3,000 | 3,000 | 0 | £1,650 |
| 6,000 | 6,000 | 0 | £3,300 |
| 11,000 | 10,000 | 1,000 | £5,750 |
| 15,000 | 10,000 | 5,000 | £6,750 |
Source: example calculations using the GOV.UK simplified expenses rates [1] [2].
The expense reduces profits charged to income tax at 20% in the basic rate band, and to Class 4 National Insurance at the main rate on profits between £12,570 and £50,270 [16] [11]. The value of the claim therefore depends on where the trader's profit sits in those bands.
An accounting year that does not end on 5 April
Many sole traders draw up accounts to a date other than 5 April. HMRC's manual works through examples for a 31 December year end, and the rule is that each mile takes the rate for the tax year in which it was driven [2]. The ATT describes the same transitional treatment, splitting the year ending 31 December 2026 between the 45p and 55p rates [4].
In an example where a trader drives 2,400 business miles between 1 January and 5 April 2026 and 7,200 miles between 6 April and 31 December 2026, the first block is claimed at 45p (£1,080) and the second at 55p (£3,960), a total of £5,040 [2] [4]. A mileage log that records dates, not just monthly totals, makes this split straightforward.
Flat rate or actual costs
The flat rate is designed to be simpler, not necessarily cheaper or more generous. The better route depends on the vehicle, its cost and how much of its use is for business.
When actual costs produce a larger claim
Actual costs tend to favour expensive vehicles with high running costs and high business use. HMRC's research put the average annual cost of running a car at £3,770 among self-employed vehicle users, with simplified-expenses users reporting lower costs of £2,850 [3]. The same research found average business mileage of 5,810 miles among flat-rate users against 9,970 among those claiming actual costs, which fits the pattern that heavier users with dearer vehicles keep their receipts [3].
Mixed use reduces an actual-cost claim. GOV.UK requires the business to claim only the business proportion of a cost used for both business and private purposes, and HMRC's research found that 70% of self-employed vehicle users also drove the vehicle privately [10] [3]. The flat rate sidesteps that apportionment, because it is applied only to business miles.
Capital allowances on business cars
Under actual costs, the purchase price of a car is relieved through capital allowances rather than as a running cost [17] [18]. The rate depends on the car's emissions, as the table shows.
| Car | Allowance |
|---|---|
| New and unused, zero emissions or electric | 100% first-year allowance |
| New or second-hand, 50g/km or less | Main rate, 14% a year |
| Over 50g/km | Special rate, 6% a year |
Source: GOV.UK, capital allowances on business cars [17] and first-year allowances [19].
The main rate fell from 18% to 14% from April 2026, and the 100% first-year allowance for new electric cars applies to cars bought before April 2027 [17] [19]. The main rate falls again, to 12%, from 6 April 2027 for Income Tax [28]. Where the car is also used privately, the allowance is restricted to the business share [17].
The choice is locked in for each vehicle
The decision is not annual. GOV.UK states: "Once you use the flat rates for a vehicle, you must continue to do so as long as you use that vehicle for your business" [1]. HMRC's manual adds that the business can only move to or from actual costs when the vehicle is replaced [2].
The lock works in the other direction too. "If capital allowances have ever been claimed in respect of a vehicle, the mileage rate cannot be used for that vehicle" [2]. A trader who claimed the first-year allowance on a new electric car has therefore chosen actual costs for that car until it leaves the business [19].
| Feature | Flat rate | Actual costs |
|---|---|---|
| Evidence needed | Business mileage log | Mileage log plus receipts for every cost |
| Private use | Ignored, only business miles counted | Every cost apportioned |
| Vehicle purchase | Covered by the rate | Capital allowances |
| Switching | Only when the vehicle is replaced | Only when the vehicle is replaced |
Sources: HMRC Business Income Manual BIM75005 [2] and GOV.UK simplified expenses for vehicles [1].
Cash basis and the flat rate
Cash basis is the standard way for sole traders and partnerships without corporate partners to record income and expenses [20] [21]. Under cash basis most equipment is claimed as an ordinary expense, but a car bought for the business is still claimed as a capital allowance, "but only if you're not using simplified expenses" for it [18].
HMRC's manual confirms that the mileage rate can be used under cash basis only for vehicles on which no capital allowances have been claimed. Goods vehicles and motorcycles bought with a cash basis deduction cannot use the mileage rate, although their actual running costs remain deductible [2].
Which journeys count as business mileage
The rate only matters once a journey qualifies. The flat rate "is not available for private journeys, such as travel from home to work, or for journeys that serve both a business and a private purpose" [2].
Home to a fixed place of work
HMRC's guidance is direct: "The cost of travelling from home to place of work is generally disallowed" [7]. Doing office work at home, or storing records or tools there, does not by itself turn home into the base of operations, so a shopkeeper's base remains the shop [7] [8].
Incidental costs follow the journey. Parking or congestion charges on a trip that is partly home to work are disallowed as well [7]. GOV.UK lists "travel between home and work" among the costs that cannot be claimed [12].
Itinerant traders and temporary sites
The position changes for traders who have no fixed place of work. HMRC accepts that "home to work" travel may be solely for trade purposes for an itinerant trader, giving the example of "a self-employed travelling sales representative" [8]. The manual cites Horton v Young, where travel to unpredictable sites was allowed, and Powell v Jackman, where a milk round was not [8].
| Pattern of work | Journey from home | Treatment |
|---|---|---|
| Shop, workshop or rented office | Home to that premises | Not allowable |
| Visits to clients from a fixed base | Base to client and back | Allowable |
| Itinerant trade with home as base | Home to changing sites | Allowable |
| Travel from outside the trading area | Home to the territory | Not allowable |
Sources: HMRC Business Income Manual BIM37605 [7] and BIM37635 [8].
Journeys with a dual purpose
Duality of purpose is the main trap. HMRC's guidance states that "duality of purpose is fatal to deduction", so a trip that combines a client visit with a personal errand on the same route needs care [8]. Under actual costs, HMRC allows "the actual costs of any trade journeys" and a proportion of shared costs such as licence, insurance and repairs [22].
Records HMRC expects
A flat-rate claim stands or falls on the mileage record. HMRC's manual requires "a contemporaneous record of business mileage" to support the claim [2], and GOV.UK tells businesses to keep records of their business miles for each vehicle [13].
What a mileage log should show
A usable log records the date, start and end points, the business purpose and the miles driven for each journey [6] [2]. Dates matter more than they used to, because a non-April year end must be split between rates, and the 10,000-mile point is measured within each tax year [4].
Records must be kept for at least 5 years after the 31 January submission deadline of the relevant tax year [9]. For the 2026-27 tax year, the online return and any balance due are due by 31 January 2027 [23].
Making Tax Digital for Income Tax
Making Tax Digital changes when mileage has to be recorded, not how it is calculated. Sole traders and landlords with qualifying income over £50,000 in the 2024-25 tax year should have started from 6 April 2026, with the threshold falling to £30,000 from 6 April 2027 and £20,000 from 6 April 2028 [24]. A mileage log kept in digital form throughout the year sits naturally alongside the digital records the scheme requires [24] [9].
Mileage when the business takes on staff
A sole trader who employs someone moves into a second set of rules. Employees are reimbursed through approved mileage allowance payments, and the business reports them through payroll rather than through its own return [15]. The guide to HMRC mileage rates covers that employer side in full.
Employee mileage uses the same pence figures
The approved rates for employees are 55p a mile for the first 10,000 business miles in a car or van and 25p after that, with 24p for motorcycles and 20p for bicycles [5] [15]. Payments up to the approved amount are tax-free and need no reporting; anything above it is taxable pay [15].
| Point of difference | Self-employed owner | Employee of the business |
|---|---|---|
| How relief arises | Allowable expense in the accounts | Tax-free approved mileage payment |
| Passenger payments | Not available | 5p per passenger per mile |
| Bicycles | Not covered by the flat rate | 20p a mile |
| Where it is reported | Self Assessment return | Payroll, or nothing if within the approved amount |
Sources: GOV.UK, rules for tax on business travel [15] and the ATT on self-employed passengers [4].
Employees paid less than the approved rate can claim the shortfall themselves, a process explained in the guide to mileage allowance relief [25]. Company car drivers use quarterly advisory fuel rates instead, which HMRC states "only apply to employees using a company car" [26].
Running payroll alongside the business
Taking on a first employee means registering as an employer, operating PAYE and filing through Real Time Information. Owner-managers starting out can use dedicated sole-trader payroll built on HMRC-recognised payroll software for SMEs, which keeps tax-free mileage out of taxable pay and puts any excess through the correct pay period [15] [27].
Accountants who handle both the Self Assessment and the payroll for the same small clients can manage both sides from a multi-client payroll dashboard. Software platforms that already capture journeys, for example field-service or expenses tools, can pass approved mileage straight into payroll through a REST API for UK payroll [15] [27].
The wider rules on what a sole trader can claim, from use of home to the trading allowance, are set out in the guide to claiming expenses when self-employed.
Conclusion
Self-employed mileage rests on three decisions made in a fixed order. The journey has to qualify as business travel, which rules out the ordinary trip from home to a fixed base. The method has to be chosen for each vehicle, and that choice holds until the vehicle is replaced. The rate then follows the tax year in which each mile was driven, which since the move to 55p means a split claim for any business whose year does not end on 5 April.
The higher flat rate makes simplified expenses more attractive for modest vehicles and moderate mileage, while capital allowances and actual costs keep their edge for expensive or electric vehicles with heavy business use. With Making Tax Digital bringing more sole traders into digital record keeping, a dated mileage log kept as the journeys happen is likely to become the standard evidence for every claim, whichever method the business uses.
Frequently asked questions
How much can a self-employed person claim per mile?
For a car or goods vehicle, a self-employed person using simplified expenses can claim 55p a mile for the first 10,000 business miles in the 2026-27 tax year and 25p a mile after that [1]. Motorcycles are 24p a mile throughout [2]. Up to and including the 2025-26 tax year, the car rate for the first 10,000 miles was 45p.
Can a sole trader claim mileage and fuel at the same time?
Not for the same vehicle. The flat rate already covers fuel, oil, servicing, repairs, insurance, vehicle tax, MOT and depreciation, so claiming fuel as well would count the cost twice [2]. A trader who wants to claim fuel must use actual costs for that vehicle, apportioned for any private use [12].
Can a self-employed person switch from actual costs to the mileage rate?
Only when the vehicle is replaced. Once a method is used for a vehicle, it must continue for as long as that vehicle is used in the business [1]. A vehicle on which capital allowances have ever been claimed can never move to the mileage rate [2].
Is driving from home to a client's premises business mileage?
It usually is when the trader works from a base and the client's premises is a separate destination, but travel from home to a fixed shop, workshop or office is not [7]. Itinerant traders whose home is their genuine base can treat trips from home to changing sites as business travel [8]. A journey that also serves a private purpose does not qualify [2].
