How to Claim Mileage as a Sole Trader Without Losing Money

Most sole traders driving 10,000 business miles a year are leaving £450 on the table. Not because the rules are complicated, but because nobody explained them clearly the first time.

Claiming mileage as a sole trader is one of the most straightforward tax reliefs HMRC offers, and one of the most consistently underclaimed. This post will fix that.

What HMRC Actually Allows: The Two Methods

HMRC gives sole traders two ways to claim vehicle expenses. Understanding the difference between them is not optional: choosing the wrong one for your situation could cost you hundreds of pounds a year.

Method One: The Simplified Mileage Allowance

This is what most tradespeople use, and for good reason. You multiply your business miles by HMRC's approved rate:

• 45p per mile for the first 10,000 miles in a tax year
• 25p per mile for every mile above 10,000

So if you are a self-employed electrician who drove 12,000 business miles last year, your deductible expense is:

(10,000 × £0.45) + (2,000 × £0.25) = £4,500 + £500 = £5,000

At a basic rate of 20% tax, that is a £1,000 reduction in your tax bill. At the higher rate of 40%, it is £2,000. The figure is not small.

The critical rule: you must use this method from the very first time you use that vehicle for business. If you buy a new van and claim actual costs in year one, you cannot switch to simplified mileage later. HMRC is unambiguous on this point.

Method Two: Actual Costs

Instead of a flat rate, you claim the real running costs of the vehicle, proportional to your business use. This includes fuel, insurance, servicing, MOT, road tax, and depreciation (calculated via capital allowances).

To work out the business proportion, you divide your business miles by your total miles for the year. If you drove 15,000 miles in total and 10,000 were for work, your business proportion is 67%. You can then claim 67% of every qualifying expense.

This method rewards sole traders with high-cost vehicles, high insurance premiums, or significant repair bills. A self-employed courier running a three-year-old diesel van with expensive servicing may come out ahead using actual costs. But the record-keeping burden is substantially higher: every fuel receipt, every insurance renewal, every garage invoice needs to be logged and stored.

For most sole traders earning between £50,000 and £80,000, the simplified mileage method wins on simplicity and delivers a competitive deduction without the paperwork overhead.

What Counts as a Business Mile

This is where sole traders most commonly trip up, either by claiming too much (a risk in the event of an HMRC enquiry) or by failing to claim miles they are fully entitled to.

Miles You Can Claim

• Travelling from your home to a temporary workplace (a client's house, a construction site you will not be at indefinitely)
• Travel between two business locations in the same day
• Visiting suppliers, merchants, or a trade counter
• Attending business meetings or training directly related to your trade
• Travelling to collect materials for a specific job

Miles You Cannot Claim

• Commuting from home to a fixed, regular place of work (even as a sole trader, if you rent a workshop or permanent office and travel there daily, that is a commute)
• Personal journeys, including school runs, shopping, holidays
• Any journey with no identifiable business purpose

The boundary between a temporary and a permanent workplace matters. HMRC defines a temporary workplace as somewhere you attend for a limited duration or for a specific task. If a sole trader plumber is working on a single new-build development for 24 months continuously, HMRC may argue that site has become a permanent workplace and the travel there is no longer claimable. In practice, most tradespeople moving between multiple client locations are on safe ground, but it is worth being aware of.

The Mileage Log: What HMRC Expects

HMRC does not require a specific format, but if they investigate your return, they will expect evidence. A credible mileage log contains:

1. Date of the journey
2. Starting point (your home address or a previous location)
3. Destination (client name and address, or trade counter)
4. Purpose (e.g. "boiler installation, 14 Elm Street" or "materials collection, Screwfix Wolverhampton")
5. Miles driven (odometer readings are ideal but not mandatory)

A note in a paper diary or spreadsheet has historically been acceptable. But from April 2026, Making Tax Digital for Income Tax requires sole traders above £50,000 to keep digital records and submit quarterly updates to HMRC. Mileage records are part of that requirement. If you are not already keeping digital mileage logs, starting now is a sensible move rather than scrambling in 2026.

If you want to understand what MTD means for your record-keeping more broadly, the post Do I Need MTD If I Earn Under £50,000? sets out the thresholds clearly.

Motorcycles and Bicycles: The Rates Nobody Mentions

The AMAP rates apply to more than just cars and vans. HMRC sets approved rates for other vehicle types too:

• Motorcycles: 24p per mile (flat rate, no threshold drop)
• Bicycles: 20p per mile

A self-employed courier or delivery driver using a motorbike for business journeys can claim 24p per mile on every business mile. A tradesperson who cycles between nearby jobs can claim 20p per mile. These claims are small individually but worth including: 500 business cycling miles is a £100 deduction, which at 20% tax means £20 back from HMRC for something most people forget to record.

Where Mileage Sits on Your Self Assessment Return

When you complete your Self Assessment tax return (SA103 for sole traders), mileage sits under motor expenses in the allowable expenses section. You do not enter the number of miles; you enter the total £ value of your mileage claim.

So if you drove 8,000 business miles using the simplified method:

8,000 × £0.45 = £3,600

You enter £3,600 as your motor expense. HMRC does not automatically ask you to prove this, but you must be able to substantiate it if they do.

If you are using the actual costs method, you enter the business proportion of your total vehicle running costs, and you should retain receipts for everything.

The how to categorise expenses for HMRC post covers the broader landscape of allowable expenses if you want to ensure you are not missing other deductions alongside mileage.

The Electric Vehicle Question

If you use an electric car or van for business, the simplified mileage rate still applies: 45p per mile for the first 10,000 business miles. HMRC has not created a separate rate for electric vehicles, despite the cost of charging being substantially different from the cost of petrol or diesel.

This creates an interesting situation. The 45p rate was designed to cover fuel costs, and petrol and diesel have historically made up a significant portion of that figure. Electric vehicle running costs are considerably lower per mile. In theory, a sole trader with an electric vehicle might benefit from the actual costs method if their total running costs are modest, since the mileage rate does not discount to reflect the lower fuel spend.

In practice, most sole traders will still find the simplified mileage method more convenient, even with an EV. The rate is generous enough and the record-keeping savings are real. But it is worth modelling the comparison if you are considering buying an electric vehicle and your annual mileage is high.

Common Mistakes That Cost Sole Traders Money

Forgetting to Record Short Journeys

A five-mile trip to a trade counter is easy to forget. Over a year, if a sole trader makes that trip twice a week, that is 520 miles. At 45p per mile, that is £234 in deductions. At a 20% tax rate, that is £46.80 of tax they did not need to pay. Multiply that across several types of forgotten short journeys and the annual cost becomes significant.

Mixing Personal and Business Fuel Receipts

If you use the actual costs method and keep fuel receipts, you must separate personal and business journeys accurately. HMRC does not accept a claim for 100% of fuel costs unless 100% of your driving was genuinely for business. The mileage log is your protection here.

Switching Methods After Year One

As noted above, HMRC's rules on the simplified mileage method require consistency from the first year. Switching to actual costs after using mileage rates, or vice versa, is not permitted for the same vehicle. If you are unsure which method you used in your first year of trading, check your previous returns carefully before filing again.

Not Claiming for Multiple Vehicles

Sole traders can claim mileage on more than one vehicle, but the 10,000-mile threshold applies per vehicle, not per person. If you use a car and a van for different business purposes, each vehicle has its own 10,000-mile allowance at 45p before dropping to 25p.

A Concrete Example: The Self-Employed Plumber

Consider a sole-trader plumber based in Birmingham, turning over £65,000 a year. He drives to customer addresses across the city and surrounding towns, collecting parts from trade counters and attending occasional supplier visits.

Over the tax year, he logs 14,200 business miles in his van.

Using the simplified mileage method:

• First 10,000 miles: 10,000 × £0.45 = £4,500
• Remaining 4,200 miles: 4,200 × £0.25 = £1,050
• Total deduction: £5,550

At a marginal tax rate of 40% (he earns above £50,270), this saves him £2,220 in income tax. He also pays Class 4 National Insurance contributions, and the deduction reduces his NIC liability too, saving him a further £415 approximately (at the 2% rate above the upper profits limit).

Total saving from mileage alone: approximately £2,635.

If he had not kept a mileage log and simply guessed at 8,000 miles in his return, he would have claimed:

8,000 × £0.45 = £3,600

The difference between a logged claim and a guessed one: £1,950 in deductions, which at his marginal rate costs him around £780 more in tax. Every year.

That is not a rounding error. That is a weekend's labour given away for free.

MTD and Mileage: What Changes From April 2026

From April 2026, sole traders with income above £50,000 must comply with Making Tax Digital for Income Tax. This means keeping digital records and submitting quarterly updates to HMRC using approved software.

Mileage records are not explicitly excluded from this. While HMRC has not published a mandate requiring GPS-based mileage tracking, the practical expectation is that digital records must be accurate and auditable. A paper logbook that you digitise once a year before your annual submission is not the same as a continuously maintained digital record.

The smarter approach is to start logging mileage digitally now: either through a dedicated mileage tracking app, or through an MTD-compliant platform that includes expense and mileage recording as part of the same workflow. TapTax, for instance, is built for exactly this kind of integration, so quarterly submissions and ongoing mileage records live in the same place.

For a broader view of what MTD compliance will demand from your record-keeping, the Late Submission Penalty MTD: The Maths That Should Alarm You post is worth reading before April 2026 arrives.

People also ask

Can I claim mileage as a sole trader if I use my personal car?

What is the HMRC mileage rate for sole traders in 2025/26?

Do I need receipts to claim mileage as a sole trader?

Can I claim mileage and also capital allowances on the same vehicle?

Start With the Miles You Drove Last Month

This post opened with a straightforward claim: most sole traders are leaving money on the table by underclaiming mileage. The fix is not complicated. It requires a mileage log, the correct rate, and fifteen minutes at the end of each week to keep it current.

If you drove 10,000 business miles last year and did not claim them, you gave HMRC a £4,500 deduction for free. At 20% tax, that is £900. At 40%, it is £1,800. The mileage allowance exists specifically to give that money back to sole traders who do the work to claim it.

Start with last month. Reconstruct your journeys from your calendar, job sheets, or phone location history if you need to. Then build the habit going forward. And when April 2026 arrives and MTD requires digital records, your mileage log will already be in the right place.

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