How do I work out my mileage allowance for self-employment?
Answered 11 March 2026
I now have all the information needed to provide a comprehensive answer. Here it is:
Mileage Allowance for Self-Employment
What the law says
Self-employed individuals (sole traders and business partnerships without a corporate partner) may claim a fixed-rate mileage deduction when calculating their trading profits, under s.94D ITTOIA 2005 (the "simplified expenses" rules).
The deduction is calculated using the "appropriate mileage amount" under s.94F ITTOIA 2005, which is:
M × R, where M = the number of miles of business journeys made (not as a passenger) and R = the applicable rate.
The statutory rates are:
| Vehicle | Rate per mile |
|---|---|
| Car or goods vehicle – first 10,000 miles | 45p |
| Car or goods vehicle – after 10,000 miles | 25p |
| Motor cycle | 24p |
The 10,000-mile threshold applies to the total relevant business journeys across all cars/goods vehicles used for the trade in the period.
"Qualifying expenditure" covered by the rate means any expenditure on the acquisition, ownership, hire, leasing or use of the vehicle — but not incidental journey expenses (e.g. tolls, parking).
Once you elect to use the mileage rate for a vehicle, no other deduction or capital allowance can be claimed for that vehicle, and the method must be applied consistently for every subsequent period that vehicle is used in the trade.
HMRC guidance / practice
Who can use it: All sole traders and business partnerships (excluding those with a corporate partner) can use this method from 2013-14 onwards. It is entirely optional and can be used whether or not the business also uses the cash basis.
Qualifying journeys: The rate is only available for journeys (or an identifiable part of a journey) that are wholly and exclusively for business purposes. Private journeys — including travel from home to work — do not qualify, nor do journeys with a mixed business/private purpose.
Record-keeping: HMRC requires a contemporaneous record of business mileage to support any claim.
What the rate covers: The mileage rate covers fuel, oil, servicing, repairs, insurance, vehicle excise duty, MOT, and depreciation.
What it does NOT cover: Incidental journey expenses such as tolls, congestion charges and parking fees — these remain separately allowable where incurred solely for business purposes.
Capital allowances: If capital allowances have ever been claimed on a vehicle, the mileage rate cannot be used for that vehicle. Instead, you would claim the business proportion of actual running costs alongside capital allowances.
Changing method: You can only switch between the mileage rate basis and the actual cost basis when a vehicle is replaced.
In summary: Multiply your total qualifying business miles by 45p (first 10,000 miles) and 25p (thereafter) for a car, or 24p for a motorcycle. Keep a mileage log. The rate is all-inclusive — do not also claim fuel, insurance, depreciation etc. separately for the same vehicle.
Citation sources
Part 2 Trading income CHAPTER 5A Trade profits: deductions allowable at a fixed rate Expenditure on vehicles Expenditure on vehicles 94D 1 This section applies if, in calculating the profits of a trade of a person for a period— a a deduction would otherwise be allowable for the period in respect of qualifying expenditure incurred in relation to a relevant vehicle (see subsection (2)), or b a deduction would be so allowable in respect of such expenditure but for the fact it is capital expenditure
Part 2 Trading income CHAPTER 5A Trade profits: deductions allowable at a fixed rate Expenditure on vehicles The appropriate mileage amount 94F 1 In calculating the profits of a trade for a period, the appropriate mileage amount in relation to a relevant vehicle for the period is— M × R where— M is the number of miles of business journeys made by a person (other than as a passenger) using that vehicle in the period, and R is the rate applicable to that kind of vehicle. 2 The rates applicable are
and maintaining the vehicle, such as fuel, oil, servicing, repairs, insurance, vehicle excise duty and MOT. The rate also covers depreciation of the vehicle. Costs not covered by the mileage rate The mileage rate does not include incidental expenses incurred in connection with a particular journey, such as tolls, congestion charges and parking fees. These will be allowable as a deduction where they are incurred solely for business purposes. Capital allowances If capital allowances have ever been
S94D ITTOIA 2005 From 2013-14 onwards, businesses may use a fixed rate per business mile to compute their vehicle expenses under the new simplified expenses rules. They can use this method of relief as an alternative to keeping detailed records of actual expenditure. The fixed rate deduction covers expenditure in respect of the acquisition, ownership, hire, leasing or use of cars (except cars designed for commercial use, for example black cabs or dual control driving instructor cars), motor cycl