Self-Employed Mileage Allowance UK 2025/26: Rates, Rules & How to Claim
If you drive for business as a self-employed person, you can claim mileage as a tax deduction. It's one of the most overlooked expenses — especially for freelancers who visit clients, attend meetings, or travel to work sites. Here's exactly how it works.
HMRC Mileage Rates 2025/26
If you use simplified expenses (also called the flat rate or approved mileage allowance), these are the rates:
Cars and Vans
| Miles in tax year | Rate per mile |
|---|---|
| First 10,000 miles | 45p |
| Over 10,000 miles | 25p |
Motorcycles
24p per mile (all miles, no threshold).
Bicycles
20p per mile (all miles).
Example: You drive 8,000 business miles in your car during the tax year. Your deduction: 8,000 × 45p = £3,600. If you're a basic-rate taxpayer, that saves you £720 in tax. If higher rate, £1,440.
Simplified Expenses vs Actual Costs
Just like working-from-home expenses, you have two options. You must pick one and stick with it for that vehicle (you can't switch back to simplified expenses once you've used actual costs for a vehicle).
Option 1: Simplified Expenses (Flat Rate)
- Use the 45p/25p rates above
- No need to track fuel, insurance, repairs, etc.
- Just keep a mileage log
- Best for: Most freelancers, especially those doing under 15,000 business miles/year
Option 2: Actual Costs
- Track every cost: fuel, insurance, road tax, MOT, repairs, servicing, finance interest, depreciation (capital allowances)
- Calculate the business-use percentage based on business miles vs total miles
- Claim that percentage of total costs
- Best for: High-mileage drivers with expensive running costs, or those with a vehicle primarily used for business
Important: Once you choose actual costs for a particular vehicle, you can never switch back to simplified expenses for that vehicle. The flat rate is a one-way door — if you start with it, you can switch to actual costs later, but not the reverse.
What Counts as a Business Journey?
This is where most people go wrong. HMRC has clear rules:
✅ You CAN Claim
- Travelling to a client's office or site
- Visiting suppliers
- Going to a meeting related to your business
- Travelling between two business locations
- Going to the bank, post office, or stationery shop for business purposes
- Travelling to a training course related to your business
❌ You CANNOT Claim
- Commuting — travelling from home to your regular place of work (if you have one outside your home)
- Personal trips with a "business stop" tacked on
- Trips that are mainly personal with incidental business
Key distinction: If you work from home and your home is your business base, then all travel to clients, meetings, and business locations is claimable. This is one of the biggest advantages of being home-based.
How to Keep a Mileage Log
HMRC doesn't prescribe a format, but your log should include:
- Date of the journey
- From / To (start and end location)
- Purpose (client meeting, supplier visit, etc.)
- Miles (use Google Maps for accuracy)
A spreadsheet works perfectly. Some people use apps like MileIQ or Driversnote, which track journeys automatically via GPS.
Keep your log for at least 5 years after the 31 January tax return deadline for that year. HMRC can enquire into your return for up to 4 years (6 years if they suspect carelessness).
Electric and Hybrid Vehicles
The same 45p/25p rates apply regardless of whether your car is petrol, diesel, electric, or hybrid. Some self-employed people with electric vehicles find the flat rate particularly generous — since their actual fuel costs (electricity) are much lower per mile than petrol, the 45p rate gives them a bigger effective deduction.
If you use actual costs with an electric vehicle, you can claim capital allowances (potentially 100% first-year allowance for zero-emission vehicles purchased new).
Passengers
If you carry a passenger on a business journey, you can claim an extra 5p per mile per passenger. This only applies if the passenger is also travelling for business purposes (e.g., a colleague going to the same client meeting).
Parking and Tolls
Parking fees, congestion charges, and toll charges for business journeys can be claimed in addition to your mileage rate. They're separate expenses — don't forget them.
Parking fines and speeding tickets are never claimable.
Common Mistakes
- Not claiming at all — if you drive for business, you're leaving money on the table
- Claiming commuting miles — home to office is not a business journey (unless your home IS your office)
- Not keeping a log — if HMRC asks, "I drove a lot" won't cut it
- Mixing personal and business miles — be honest. HMRC can spot inflated claims.
- Switching methods incorrectly — remember, actual costs to simplified is a one-way street
Quick Calculation
Estimate your annual tax saving:
- Count your business miles this year (check Google Maps history if you haven't been logging)
- First 10,000 × 45p = £X
- Remaining miles × 25p = £Y
- Total deduction = £X + £Y
- Tax saving = total deduction × your tax rate (20% or 40%)
Most freelancers who drive regularly find they're leaving £500–£2,000 in unclaimed deductions every year.
Need to get your expenses in order? Our Getting-Paid Toolkit includes expense tracking templates and financial tools for UK freelancers.