Is fuel
tax deductible?

Partly. Fuel for business journeys is allowable, but only the business share of the fuel you buy, and not at all if you use the simplified mileage rate for that vehicle, because the flat rate already covers fuel (GOV.UK). Taxi drivers and hauliers put fuel in cost of goods sold rather than travel costs.

Fuel is where the choice between actual costs and the mileage rate matters most. On actual costs you claim the business share of every fill-up; on the mileage rate you claim nothing for fuel directly, because 55p a mile (from 2026/27) is meant to cover it. You cannot do both for the same vehicle.

Is fuel tax deductible?

The HMRC rule

Vehicle insurance, repairs, fuel, parking, hire, road tax and breakdown cover, fares and hotel rooms for business trips are allowable. Travel between home and work, non-business journeys, and fines are not. The rule comes from Car, van and travel expenses, Self-employment (full) notes, SA103F, Simplified expenses if you’re self-employed.

Fuel is on GOV.UK's list of allowable travel costs (travel expenses), subject to the rule that you can only claim the business part of a cost used for both business and personal purposes. If you use simplified expenses for a vehicle, the flat rate replaces all its running costs, including fuel (simplified expenses). The SA103F notes add a detail: taxi and minicab drivers and businesses in the road haulage industry put fuel costs in box 17, cost of goods, not box 20 (SA103F notes).

When you can claim it

• The business share of fuel for a car, van or motorcycle when you claim actual costs.
• All the fuel for a vehicle used only for the business, such as a sign-written van with no private use.
• Charging costs for an electric vehicle used for business, in the same proportion.
• Fuel for landlords’ journeys made wholly for the letting business.

When you cannot

• Fuel for a vehicle whose business use you claim at the mileage rate.
• Fuel for private journeys, including commuting to a permanent workplace.
• Fuel for a family car that is not used in the business.
• Fuel bought for someone else’s vehicle, unless it is used for your business journey.

What to claim instead

If working out the business share of fuel is a burden, the simplified mileage rate may suit you better: 55p a mile for the first 10,000 business miles in 2026/27 covers fuel and every other running cost, and needs only a log of business miles. The choice is per vehicle, and once you use the flat rate for a vehicle you keep it.

How to decide if you can claim it

1. Was it for the business? A cost is only allowable if you incur it wholly and exclusively for the business. If it also serves a personal purpose that cannot be separated, such as clothing that keeps you warm or a meal that keeps you going, HMRC disallows it.
2. Is part of it personal? Where a cost has a business part you can identify, such as the business calls on a phone bill or the business miles in a car, you claim that part and leave the rest out, on a reasonable basis you can explain.
3. Is it a running cost or something you keep? It is a running cost, so on the cash basis it counts when you pay it and on traditional accounting when you incur it. Nothing about it needs spreading over later years.
4. Is there a specific rule? For fuel, the deciding rule is business travel and vehicle running costs: vehicle insurance, repairs, fuel, parking, hire, road tax and breakdown cover, fares and hotel rooms for business trips are allowable. Travel between home and work, non-business journeys, and fines are not.

Worked example: a gardener’s van fuel

A gardener spends £2,800 on diesel for her van in a year. Her mileage log shows 12,000 miles, of which 10,200 were business journeys, so business use is 85%. She claims £2,380 of fuel (85% of £2,800), alongside 85% of her other van running costs.

Working out the business percentage

The usual method is miles: divide business miles by total miles for the year and apply the percentage to fuel and other running costs. Keep a log for the whole year, or for a representative period if your pattern is steady and you can show it. A van used only for work, with no private use, can claim all its fuel; a car used for the school run and business trips cannot claim more than the business miles justify.

Electric vehicles

For an electric car or van, charging costs are the fuel. Public charging and workplace charging are straightforward to evidence. If you charge at home, work out the electricity used for the vehicle (a separate meter or the vehicle's own records help) and claim the business share of that. The mileage rate is the same for electric vehicles as for petrol and diesel ones, and many drivers find it simpler.

VAT on fuel

If you are VAT registered and reclaim VAT on fuel for a vehicle that also has private use, you either account for the private use with the fuel scale charge, reclaim VAT only on business fuel, or reclaim no VAT on fuel at all. For Income Tax, you record fuel net of any VAT you reclaim. The VAT choice and the Income Tax claim are separate decisions.

Fuel as a cost of sales

For taxi drivers and hauliers, fuel is so central to the service that HMRC asks for it in cost of goods sold rather than travel costs. The tax effect is the same; it simply sits in a different box on the full self-employment pages. Other drivers, such as couriers using their own vehicle, normally keep fuel in travel costs unless their accountant treats it as a direct cost.

If you are a landlord

Landlords can deduct vehicle running costs, including fuel, for the proportion of journeys made for the letting business, or use the mileage rate instead (GOV.UK). The same rule applies: fuel is not claimed separately if you use the mileage rate for that vehicle.

Where it goes on your return and in MTD

For a sole trader, the allowable part goes under car, van and travel expenses (SA103F box 20 on the full self-employment pages). Under Making Tax Digital for Income Tax, it goes in the same category of your quarterly update, which is the category TapTax files it under when you record the cost.

For a landlord, it belongs in travel costs (property) (SA105 box 29 on the UK property pages), and in the matching category of a Making Tax Digital property update.

If your turnover was under £90,000, you can use the short self-employment pages (SA103S), which ask for a single figure for total allowable expenses rather than a box-by-box breakdown, and the full pages let you give just a total in box 31 too. The category still matters for your own records and for Making Tax Digital, where each quarterly update uses the same categories unless you choose to send one consolidated figure.

Most sole traders now use the cash basis, the default from the 2024/25 tax year, which counts a cost when you pay it. On traditional accounting you count it when you incur it, and equipment you keep goes through capital allowances rather than expenses.

How much an allowable cost saves

The value of a deduction is the tax it removes from your profit, not the cost itself. At the basic rate a sole trader saves 26p for every pound of allowable expense, at the higher rate 42p, and in the personal allowance taper between £100,000 and £125,140 as much as 62p. Landlords pay no Class 4 on rental profit, so they save 20p or 40p.

What £1,000 of allowable expense saves a sole trader in 2026/27

• Basic rate (20% + 6%)£260
• Higher rate (40% + 2%)£420
• Additional rate (45% + 2%)£470
• Allowance taper band (60% + 2%)£620

Records to keep

Keep every invoice and receipt for the vehicle, with a note of how you worked out the business share, such as a mileage log showing business and total miles for the year. HMRC may ask how you arrived at the percentage, and a log made at the time is the best evidence.

From 6 April 2026, sole traders and landlords with qualifying income over £50,000 keep these records digitally and send quarterly updates under Making Tax Digital, falling to £30,000 from April 2027 and £20,000 from April 2028. The MTD requirement checker shows when it applies to you.

Common mistakes

• Claiming fuel and the mileage rate for the same vehicle.
• Claiming 100% of fuel for a car that is also used privately.
• Estimating the business percentage without a mileage log to support it.

Related expenses

This item sits in the car, van and travel expenses category, alongside buying a car, buying a van, car insurance, car leasing and PCP, car repairs and servicing, electric and hybrid cars, food and meals and hotels. The A to Z of expenses answers the same question for every other cost.

TapTax sorts each cost into the right category as you record it, applies the business share where you set one, and keeps the receipts with the figures, ready for your quarterly updates and final return.