Note: This page has been updated to reflect the new mileage rates announced by Chancellor Rachel Reeves on 21 May 2026, backdated to April 2026.

When you use your own vehicle for business purposes, you may be able to claim a mileage allowance to cover your costs. This includes petrol, wear and tear, and maintenance and repair bills. Keeping records of your travel will also help you understand the costs and benefits of using your own vehicle for work, and whether it might be better to consider leasing or hiring in future. Make sure you also claim other allowable expenses such as parking.

There are two ways to claim for using your own vehicle for business: you can claim a proportion of your actual total costs, or use a flat rate mileage allowance.

Claiming actual costs covers everything from buying the vehicle to fuel, insurance, servicing and repairs. To do this, you'll need to keep accurate records for five years from your applicable tax submission, including all business mileage with the date, start and end addresses, and the total distance. If you're mixing personal and business use, you'll need to keep records of both to calculate the work percentage, along with records of your insurance, repairs, servicing, parking and licence costs. This can be time consuming, but it's worthwhile if you rack up lots of miles every year or have high road tax, insurance and fuel costs.

Sole traders can instead use a flat rate mileage allowance as part of the simplified expenses offered by HMRC, making tax admin quicker and easier. You just apply a flat rate intended to cover all vehicle costs, and only need to record your business mileage.

You won't be able to choose the simplified option if you've claimed capital allowance for your vehicle, or included it in your business expenses. And you can't switch at a later date to using actual costs for the same vehicle. But if you have multiple cars or vans, you can choose actual costs for some and mileage allowance for others.

New rates from April 2026: In her statement to Parliament on 21 May 2026, Chancellor Rachel Reeves announced a 10p per mile increase to tax-free mileage rates, backdated to the start of the 2026/27 tax year. This is a significant increase – the first in over a decade – and is intended to help workers facing higher fuel costs.

If you're self-employed, you can now claim a mileage allowance of:

• 55p per business mile travelled in a car or van for the first 10,000 miles, and
• 25p per business mile thereafter
• 24p a mile if you use your motorbike for business journeys
• 20p a mile for bicycles

You can also claim an additional 5p per mile for each extra passenger you're driving for work purposes. So, if three of you are travelling together for business purposes, as the driver you'll be entitled to an extra 10p per mile on top of your mileage allowance.

All figures reflect the rates announced on 21 May 2026, and you can check the mileage and fuel rates approved by HMRC on the Gov.uk website.

You're not able to claim mileage allowance for personal journeys, they must be "wholly and exclusively for business purposes". And you also can't claim for journeys to and from your usual place of work if you have an office or commercial business premises. But you're still able to claim for travel to a temporary workplace, for example if you're an IT engineer, electrician or plasterer who needs to travel to different sites and jobs to work.

A temporary workplace is defined as somewhere where you will spend less than 40% of your time, or if you don't expect to work at that location for more than 24 months, as outlined in the HMRC Employment Income Manual. For the purposes of these rules, the location and journey have to change, so you can't just reset the time limit by working at a premises next door to the original address. If you're returning to a client, it will need to be after a break long enough that you haven't spent more than 40% of your time at their location over the last 24 months.

You're also unable to use the flat rate mileage allowance when you're a limited company director, or if you're using a vehicle designed for commercial use, such as black cabs, hackney carriages or dual control driving instructors' cars.

And you can't use simplified expenses for a vehicle if you've already claimed capital allowances for it, or included it as an expense when you worked out your business profits.

If you're unsure about any elements of mileage allowance, or any self-employed tax guidance, it's best to get specialist advice from an accountant. And IPSE members can find discounted accountancy and other services via partners in our Marketplace.

1. You've driven 1,200 business miles in your car during the year. Calculation: 1,200 miles x 55p per mile = £660 Annual mileage allowance = £660 (previously £540)
2. You've driven 10,000 business miles in your van during the year. Calculation: 10,000 miles x 55p per mile = £5,500 Annual mileage allowance = £5,500 (previously £4,500)
3. You've driven 12,000 business miles in your car during the year. Calculation: 10,000 miles x 55p per mile = £5,500, plus 2,000 miles x 25p = £500, giving a total of £6,000 (previously £5,000)

1. They are backdated to 6 April 2026. If you have already recorded mileage this tax year at the old rates (45p/25p), you can claim the difference when you file your Self Assessment.
2. The passenger payment rate (5p per mile) is unchanged – only the core rates increased.

It’s a good idea to log all of your business mileage, as this makes it easier to claim the right amounts when you’re submitting your tax returns. It will also be more credible if you have precise details of dates, miles travelled, journeys and reasons, especially when HMRC can request proof during an investigation.

Get into the habit of recording details after every journey which you may claim mileage allowance for. This can be done manually, but it can be time consuming to update a spreadsheet and easily forgotten after a long trip.

Various invoicing tools for freelancers and the self-employed include recording travel expenses, including mileage allowance. Or you can use dedicated apps such as Driversnote or Mile IQ which automatically track your journeys via the GPS on your phone, and allow you to log any related expenses quickly and easily. With Making Tax Digital applying to more self-employed businesses in the future, just make sure any invoicing or vehicle log software is HMRC compliant to avoid having to switch in the future.

If you’re using good accounting and invoicing software, and logging all of your journeys correctly, then you’ll save a lot of time and effort in completing your Self-Assessment tax return. And it will cut down the time required if you use an accountant to submit your details.

When you’re using simplified expenses and the flat rate mileage allowance, you’re not allowed to claim separately for motoring costs such as insurance, road tax or fuel, because these are included in the calculated amounts.

And don’t deliberately inflate your mileage. Inaccurate or overestimated numbers could trigger an HMRC investigation, and result in substantial penalties.