Mileage allowance for sole traders: HMRC rules and rates (2025/26)

If you’re self-employed and use your own vehicle for business, you may be able to claim mileage as an allowable expense.

It’s one of the most common and straightforward ways to reduce your tax bill – but there are rules you need to be aware of.

This guide explains how the mileage allowance works for sole traders, how to claim it on your tax return, and what records you need to keep.

What is the mileage allowance?

The mileage allowance is a flat-rate system set by HMRC. Instead of claiming individual costs, such as fuel, insurance, or servicing, you multiply your business miles by the official rate.

These are the current rates for 2025/26:

You can only use this method if you haven’t already claimed for actual vehicle running costs or capital allowances on the same vehicle.

More on simplified expenses from GOV.UK

Which journeys count as business mileage?

You can only claim for journeys that are wholly and exclusively for business purposes. This usually includes:

• Travel to meet a client or customer
• Journeys to buy stock or supplies
• Trips to a temporary workplace or job site

Ordinary commuting from home to your regular base doesn’t count. HMRC is strict on this – even if you work from home, you can’t usually claim for trips to your regular co-working space or shop premises.

See official travel expense rules

How to record mileage properly

To claim mileage, you need a reliable record of every business journey. At a minimum, this should include:

• Date of travel
• Start and end location
• Purpose of the trip
• Total miles driven

You can track this using a paper logbook, a spreadsheet, or a dedicated app. Some self-employed people now use vehicle tracking apps that automatically log journeys and separate personal from business mileage.

How to claim it on your tax return

When you fill out your Self Assessment tax return, you’ll enter your total mileage expense under the “vehicle and travel costs” section. Just calculate your total business miles for the year and apply the HMRC rate.

If you use the cash basis for your accounts, this simplified method can be especially convenient. But it’s still available if you use traditional accounting, provided you meet the eligibility rules.

Can I claim for passengers?

Yes, if you take other employees or subcontractors with you for business purposes, you can claim an extra 5p per mile per passenger. This only applies if they’re also working on the job and you’re both self-employed or employed by the same business.

When you can’t use the mileage allowance

You can’t use the simplified mileage method if:

• You’re claiming capital allowances on the vehicle
• You’ve already claimed for actual running costs
• You use a company vehicle (not relevant to sole traders, but worth noting)

Once you choose to use simplified expenses for a vehicle, you must continue using that method for as long as you use the same vehicle for your business.

Helpful tools for tracking mileage

You can keep mileage records manually, but many sole traders find it easier to use a tracking app — especially if you drive often for work.

Copy-and-paste mileage log (spreadsheet template)

You can download a ready-to-edit version in Excel or Google Sheets, or build one based on this structure. Just be sure to keep it up to date – HMRC can request evidence.

Final tips

• Keep your mileage records up to date – HMRC can ask to see them
• Don’t include personal trips, even if they’re on the way to a business stop
• Use apps like MileIQ or Everlance if you struggle with manual logs

Claiming mileage as a sole trader is one of the easiest ways to lower your tax bill – but only if your records are solid and you apply the rules correctly.

Find out more about other simplified expenses (e.g. working from home costs).

What if I run a limited company?

The mileage system also applies if you run a limited company, but the rules work slightly differently.

Instead of claiming the allowance on your personal tax return, you need to claim the mileage as a business expense and reimburse yourself through the company.

The rates are the same (45p per mile for cars up to 10,000 miles, 25p after that), but they must be paid from company funds.

Limited companies can also claim for business use of bicycles and motorcycles, as long as the journeys are entirely work-related and properly recorded.

Just make sure you keep mileage logs and board minutes if you’re paying yourself as a director or employee.