If you're self-employed in the UK, chances are driving is a regular part of both your work and personal routine. But as every driver knows, running a vehicle isn’t cheap—fuel, maintenance, insurance, and wear and tear all add up. The good news? When you use your car for work, you can claim back some of those costs through your self-employed mileage allowance.

Self-employed mileage can be claimed in one of two ways: the flat rate method (simplified expenses) or the actual cost method (direct expenses). The flat rate is the easiest option, letting you claim a fixed amount per business mile travelled. The actual cost method allows you to claim a percentage of your total vehicle expenses based on business use.

Not sure which option is best for you? This complete guide to self-employed mileage and how to claim your self-employed mileage allowance will steer you in the right direction.

Simplified expenses vs actual cost explained

Before you can begin claiming mileage allowance, you need to decide which system will be best for you. To make the right choice, you must know how each one works and what specific allowances are covered or excluded. You can then look at your own vehicle usage habits and make an informed decision. 

Differences at-a-glance

• Actual cost: This system sees you claiming a proportion of the total cost of motoring in a given year. You do this by adding up all your vehicle-related receipts and then calculating the percentage of your total mileage that was for business.

• Example: if you drove 10,000 miles in a year and half of those journeys were for business, you’d be able to claim 50% of ALL costs associated with motoring in that year – including repairs and maintenance. 

• Simplified expenses: Also known as flat rate expenses and often the de-facto method when people say ‘mileage allowance’. Flat rate expenses offer a set monetary value for each business mile that you can claim by submitting a total business mileage figure.

• Example: using the same figures above, you’d submit 5000 business miles to HMRC, resulting in 5000 x 55p = £2,750.

Still unsure? Let’s take a closer look at each system to help demonstrate which is better for you. 

Flat rate mileage expenses (simplified expenses)

Simplified expenses allow you to claim a flat rate for every business mile driven. It's the preferred method for many Sole Traders and is so commonly used that it's often assumed to be the only 'mileage allowance' available.

The flat rate attributes a set monetary value to every qualifying 'business' mile, which is intended to cover fuel and other running costs like insurance, repairs, and depreciation. If your business mileage in a car or van exceeds 10,000 miles in a tax year, you must use a reduced rate for the miles over that threshold.

What you can claim for under simplified expenses

Mileage accrued in any of the following vehicles: 

• Cars, excluding those designed for commercial usage like dual control driving instructor cars or black cabs. 
• Goods vehicles such as vans and trucks
• Motorcycles

What is the simplified expense/flat rate mileage allowance for 2026/27?

Instead of tracking every fuel receipt, you can claim a simple flat rate per mile to cover your vehicle costs.

Flat rate expenses in action:

Paul uses his car to drive to client meetings and attend conferences. He tracks his mileage for the year, noting down business or personal usage to determine a total of 12,000 business miles. 

Paul can claim 55p on the first 10,000 miles (£5,500) then 25p on the remaining 2000 (£500) – giving him a total of £6,000 mileage allowance.

When is this method best for you?

Flat rate expenses make it easy to recoup some of your driving costs, but don’t accurately reflect the full costs of motoring and may not be as efficient for self-employed people who do a lot of motoring for business purposes. 

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How does actual cost method work?

Actual expenses require you to keep a detailed record of your vehicle's associated costs. Fuel receipts, repairs, invoices, etc must all be kept and recorded accurately. Once you’ve got a total yearly cost, you must work out what percentage of usage was classed as business and apply it to the total. 

Unlike the flat rate method, this approach requires detailed record-keeping so you can provide evidence for every cost you claim.

What you can claim for using actual expenses:

• Car insurance
• Fuel
• Repairs and maintenance
• Servicing and MOT
• Vehicle tax
• Parking
• Breakdown cover

Please note that you can only claim for the business-use proportion of each cost. For example, if you use your car 60% of the time for business, you can only claim 60% of the fuel costs.

Direct cost expensing in action:

Elaine drives her personal vehicle for business purposes a few days per week. She keeps a record of every car-related purchase she makes, including trips to the petrol station and her servicing costs. In a year, these costs total £2500. Elaine looks at her total mileage, which is 8000, and attributes half (50%) of said mileage to business use. She then applies 50% to her £2500 total to get a figure of £1250 that can be claimed through expenses. 

When is this method best for you?

Since you can claim for costs, including repairs and maintenance, actual expensing allows you to claim more accurate amounts against the real cost of driving for your business. It requires far stricter record-keeping but is generally the favoured method for companies that do a lot of business miles. 

Self-employed holiday pay: what am I entitled to?

Eligibility and restrictions

To be eligible for either system, you need to be a self-employed person who completes “wholly and exclusively” journeys for business purposes. You can’t claim for costs associated with travelling between your home and a place of work as that is viewed as a commute. 

You can’t use simplified expenses if you’ve claimed capital allowances for your vehicle or if you’ve already included your car in business expenses. You can’t claim for other motoring costs, such as tax or insurance, as they’re deemed to be included in the flat rate. Once you start using the flat rate, you’ll be expected to continue with this method throughout the vehicle's lifetime. 

Actual expenses don’t have the same restrictions, so you can claim capital allowances and even a 100% first-year allowance on a new unused car with CO2 emissions under 50g/km until 31 March 26. 

Claiming your mileage allowance 

Claiming mileage allowance, like many other tax relief forms, is part of your self-assessment tax return. In order to complete it correctly, however, you’ll need to have followed these steps: 

1. Record your mileage: Use a logbook, app, or spreadsheet to record every business journey, including the date, destination, purpose, and miles travelled.
2. Keep your receipts: If using the actual costs method, keep all receipts and invoices related to your vehicle. You'll also need a record of your total annual mileage (both business and personal).
3. Total your business miles: At the end of the tax year, add up your total business mileage.
4. Calculate your deduction: Work out your total claimable amount depending on which method you've chosen. Once you know the monetary value of your motoring expenses, you can deduct it from your profits.‍
5. Complete your tax return: Include your total figure in the expenses section of your Self Assessment tax return.

Make motoring expenses easier with Crunch

Now that you know what you can claim for, it’s time to start recording your mileage before your next self-assessment. While both forms of expensing make it easier for self-employed people to manage the cost of motoring, the flat rate method tends to be the more popular choice due to its simplicity. If you’d like to use simplified expenses, you can use our free mileage calculator to work out how much you can claim. 

You can also try out Sole Trader Pro, an accountancy package designed specifically for Sole Traders, which allows you to accurately track expenses and makes your tax reporting simple. If you’re planning to use the direct expenses method, a tool like ours is essential to make sure you have an accurate record and associated receipts.   

Accelerate your Sole Trader success story by using Sole Trader Pro to track mileage allowance and other business costs. Click here to start today. 

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FAQS

Can I claim mileage allowance if I am self-employed?

Yes, as a self-employed Sole Trader or partner, you can claim for your business mileage using either the simplified expenses (flat rate) or actual costs method. It's up to you to choose which method suits your business and to keep the appropriate records for your Self Assessment.

What does the 55p mileage allowance cover?

The 55p figure is applied to the first 10,000 miles claimed under simplified expenses. It is intended to offer a flat deduction that covers ALL vehicle costs.

What is the mileage allowance for 2026/27?

The simplified expenses mileage allowance for electric or fuel cars is 55p for the first 10,000 miles and 25p for each mile exceeding it.

Can I claim a van as a business expense?

If you use a van as part of your business, you can claim for the cost of its purchase as a capital allowance. However, if you do so, you can’t use the flat rate mileage allowance afterwards.