Who can claim mileage — and for which journeys

If you use your own car, van, motorcycle or bicycle for work, you can usually claim a tax-free mileage allowance. It makes no difference whether you are a sole trader, a partner, a director of your own limited company or an employee — the principle is the same. The taxman accepts that running a vehicle costs money, and the mileage rates are designed to be a simple, evidence-light way of covering that cost.

The important word is business. Ordinary commuting — the journey between your home and your regular place of work — is not claimable. Nor is popping to the supermarket on the way home. What counts is travel that is genuinely for the business:

• Visiting clients, customers or suppliers
• Travelling to a temporary workplace, such as a site you are only working at for a few weeks
• Trips to the bank, accountant, solicitor or post office in the course of business
• Deliveries, collections and buying materials or stock
• Attending training, trade shows or networking events

If you work from home and have no fixed business premises, your position is actually stronger: many journeys that would otherwise look like commuting can qualify, because you have no permanent workplace to commute to.

The HMRC mileage rates

The approved mileage allowance payments, or AMAPs, have been unchanged for well over a decade. For cars and vans the rate is 45p per mile for the first 10,000 business miles in a tax year, dropping to 25p per mile after that. Motorcycles attract 24p per mile, and bicycles 20p per mile.

Two things catch people out. First, the 10,000-mile threshold applies across all your business mileage in the year, not per vehicle or per client. Second, if you carry a passenger on a business journey, you can add 5p per passenger per mile on top — worth knowing if you regularly take a colleague or subcontractor with you.

You do not need to justify the rate with receipts for fuel, servicing or insurance. The rate is the rate. That simplicity is exactly why it suits most small businesses.

Mileage rates or actual running costs?

There is an alternative. Instead of the flat rates, you can claim the business proportion of your actual motoring costs — fuel, insurance, road tax, servicing, repairs, breakdown cover — plus capital allowances on the vehicle itself. This is sometimes better if you drive a lot of business miles in a thirsty or expensive car.

You cannot do both. Pick one method and stick to it for that vehicle. Keep in mind that the actual-costs route means keeping every receipt, working out a defensible private-use percentage, and adjusting it each year. For most sole traders doing a few thousand business miles, the flat rate is far less hassle and rarely leaves them out of pocket.

How to keep a mileage log that holds up

HMRC does not require a specific format, but it does expect your claim to be supported. A mileage log is the standard answer, and it only needs four things per journey:

• The date
• Where you went — from and to
• The purpose, in plain English
• The number of miles

“Client meeting, Leeds” is fine. “Business trip” is not. If HMRC ever asks, the purpose is what links the journey to your trade.

Spreadsheets and mileage apps both work well. The trick is to record the journey the same day, while you still remember it — trying to reconstruct a year of driving in April is miserable and error-prone. You should keep the records for at least five years after the 31 January filing deadline for that tax year.

For regular, repeating journeys, a representative log can work: if you visit the same client every Tuesday, you can keep a detailed record for a typical month and apply it consistently, as long as it genuinely reflects what you do.

Sole traders, directors and employees

As a sole trader, claiming mileage simply reduces your taxable profit. At 45p a mile, a 4,000-mile year gives you a £1,800 deduction, which flows straight through to your tax and Class 4 National Insurance bill.

If you run a limited company, the mechanics differ. You personally incur the cost, and the company reimburses you at HMRC rates. That payment is tax-free and National Insurance-free in your hands, and it is a deductible expense for the company, reducing your corporation tax. Paying yourself more than the approved rate is possible, but the excess becomes taxable income, so it is rarely worth the paperwork.

Just avoid double counting: if the company has already paid you 45p a mile, the company claims it and you do not claim it again on a Self Assessment return.

Common mistakes that cost you money

• Claiming commuting. The single most common error, and the easiest for HMRC to spot.
• Using 45p beyond 10,000 miles. The rate drops to 25p. Recalculate before you file.
• Mixing methods. Claiming running costs and mileage rates for the same vehicle.
• Vague log entries. Dates and mileage without a purpose are weak evidence.
• Forgetting extra costs. Parking, tolls and the congestion charge are separate business expenses, claimed on top of mileage — keep the receipts.
• Using mileage rates for a company car. If the business owns or leases the vehicle, you use advisory fuel rates instead.

Set aside ten minutes each Friday to tidy up the week’s journeys, and the whole thing becomes routine. Do that consistently and your mileage claim will be accurate, defensible and quietly valuable at the end of the year.