Vehicle and fuel costs, mileage versus actual cost, record-keeping, National Insurance, VAT and MTD explained for UK self-employed removals and man-and-van drivers.
A man and van business looks simple from the outside: a vehicle, a strong back and a phone that keeps ringing. The tax behind it is anything but, because almost everything you spend money on is tied to the van, and the rules on vehicles are where self-employed drivers either save hundreds of pounds or quietly overpay. Get the vehicle decision right and keep a clean record of every cash job, and the rest of your Self Assessment falls into place.
This guide is written for the UK sole trader doing house removals, single-item courier runs, clearances and odd-job moving work. It covers how your profit is taxed, the mileage-versus-actual-cost decision that defines your return, the trade-specific kit you can claim, National Insurance, VAT for growing firms, and the Construction Industry Scheme for drivers who pick up builder work.
As a sole trader you pay Income Tax on profit, which is your total takings from moving work minus allowable expenses. For 2025/26 the personal allowance covers the first GBP 12,570, then you pay 20% to GBP 50,270, 40% to GBP 125,140 and 45% above, with the personal allowance tapering away between GBP 100,000 and GBP 125,140 to create an effective 60% band. Class 4 National Insurance is 6% on profit between GBP 12,570 and GBP 50,270 and 2% above, and Class 2 NIC is settled through your Self Assessment return.
Scottish drivers pay Scottish Income Tax on profit through six bands (19%, 20%, 21%, 42%, 45% and a 48% top rate) with an S-prefixed tax code, while National Insurance stays UK-wide. Welsh drivers carry a C-coded tax code at rates currently matching the rest of the UK. If you also have a PAYE job, perhaps van work on the side of employed warehouse shifts, your tax code can end up wrong and waste your allowance. Run it through the tax code checker if it looks off.
This is the choice that defines a man-and-van return, because the van is the business. You have two ways to claim vehicle costs and you must use the same method for that vehicle the whole time you own it.
Simplified mileage. Claim a flat 45p per business mile for the first 10,000 miles in the tax year, then 25p after that. This single rate is meant to cover fuel, servicing, insurance, repairs and the van's depreciation. You keep a mileage log instead of a shoebox of receipts. It is quick, but it bundles everything into one figure, so it suits low-mileage drivers with a cheap, economical vehicle.
Actual costs. Claim the business proportion of every running cost (fuel, road tax, insurance, MOT, servicing, repairs, tyres, breakdown cover) plus capital allowances on the van itself, or the interest and finance charges if it is on finance or lease. A removals driver typically runs a thirsty, heavy Luton or 3.5-tonne van, covers serious mileage, and spends real money on tyres and servicing, which is exactly the profile where actual costs win comfortably.
The honest answer is to work it out both ways in your first year. Total your real running costs and capital allowances, then total what 45p/25p per mile would give you, and use the larger. For most full-time removals drivers that is actual costs, but a part-timer with an old paid-off van and modest miles may find mileage simpler and barely worse. Check the impact on your overall bill with the sole trader tax calculator before you commit.
An expense is allowable when incurred wholly and exclusively for the business. Beyond the vehicle, removals work carries a long list of trade-specific costs that drivers routinely forget.
| Expense | What qualifies | Notes |
|---|---|---|
| Fuel | Diesel or petrol for business journeys | Mileage rate includes this; actual-cost claims it separately |
| Vehicle running costs | Road tax, insurance, MOT, servicing, repairs, tyres, breakdown cover | Only under the actual-cost method, scaled to business use |
| Van purchase or finance | Capital allowances on the van, or lease and finance interest | Vans qualify for the Annual Investment Allowance |
| Removals equipment | Blankets, straps, ratchet ties, trolleys, sack trucks, dollies, ramps, furniture skates | Fully deductible working kit |
| Packing materials | Boxes, bubble wrap, tape, mattress and sofa covers, labels | Consumables bought for jobs |
| Specialist insurance | Goods-in-transit cover, public liability, business van insurance | Essential for moving customers' belongings |
| Zone and road charges | Congestion charge, ULEZ and clean-air zone fees, tolls, ferries, parking | Keep the payment confirmations |
| Casual labour | Paying a mate or porter to help on a heavy job | Keep a record of who, when and how much |
| Phone and admin | Business mobile, job-booking and route apps, website, advertising | Claim the business proportion of dual-use bills |
| Workwear | Branded uniform, hi-vis, steel-toe boots, gloves, back support | Protective and branded clothing only, never everyday clothes |
| Professional fees | Accountancy, bookkeeping, business banking | Fully deductible |
The kit that protects furniture and your back is fully allowable: blankets, straps, trolleys, sack trucks, ramps and packing materials are all working costs. Protective clothing such as steel-toe boots, gloves and a back-support belt counts, as does branded uniform with your business name on it. What does not count is ordinary clothing, so a plain pair of jeans or trainers you also wear off the job is never allowable, even if you only bought them for work.
The private share of any dual-use cost has to come out. If the van does the weekly shop and the school run as well as jobs, only the business-use percentage of its costs is allowable, which is why an honest mileage log matters. The same goes for your phone. Parking fines and speeding tickets are never deductible. And the food you buy on a normal working day is not an expense, although a meal on an overnight long-distance move can be.
Take a full-time removals driver running a 3.5-tonne Luton, turning over GBP 46,000 of takings for the year and choosing the actual-cost method.
Takings: GBP 46,000
Allowable expenses:
Taxable profit: GBP 46,000 minus GBP 24,500 = GBP 21,500
Income Tax: GBP 21,500 minus GBP 12,570 = GBP 8,930 at 20% = GBP 1,786
Class 4 NIC: GBP 8,930 at 6% = GBP 536
Total tax and NIC: roughly GBP 2,322 for the year. The big AIA claim on the van is one-off, so next year, with the van already written down, the profit and the bill will be higher even on similar takings. If you have other income on top, for example a part-time PAYE job, run the combined figures through the multiple-income tax calculator so the streams stack correctly.
For a man and van, the vehicle is the business and the vehicle method is the return. Decide mileage or actual cost on the numbers, log every job and every mile, and the tax sorts itself out.
Removals work attracts a lot of cash and card-reader payments for one-off jobs, and that is exactly where HMRC expects clean records. Log every job as it is paid, gross, before you take anything off. Keep your mileage log current if you use the simplified method, because a reconstructed log at year-end never holds up. Photograph receipts for fuel, equipment and charges the day you incur them, and keep zone-charge and toll confirmations from your email. Records must be kept for at least five years after the 31 January filing deadline. Doing this continuously is also what MTD will require from April 2026, so building the habit now pays off twice.
Two classes apply. Class 4 NIC is 6% on profit between GBP 12,570 and GBP 50,270 and 2% on profit above that, calculated automatically from your return. Class 2 NIC is now settled through Self Assessment rather than paid separately, and where profit is below the small-profits threshold you can still pay it voluntarily to protect your State Pension and benefit entitlements. For a driver having a lean year, that voluntary Class 2 payment is often worth making to keep a qualifying year on your record.
Most house removals have nothing to do with construction. But man-and-van drivers often pick up site clearance, demolition waste removal, builder's-merchant deliveries onto a site, or moving materials around a construction project for a contractor, and that work can fall under the Construction Industry Scheme. Where CIS applies, the contractor must deduct 20% from your labour if you are CIS-registered, or 30% if you are not, and pay it to HMRC on your behalf.
Because those deductions are taken from your gross labour before your expenses, CIS subcontractors usually overpay through the year and are due a refund once their real costs are set against the income at Self Assessment. If any of your work is construction-related it is almost always worth registering for CIS so you suffer 20% rather than 30%. Our full guide to CIS for subcontractors explains how the deductions work and how to claim the refund.
You must register for VAT once taxable turnover exceeds GBP 90,000 in any rolling 12-month period. A solo driver rarely reaches it, but a removals business running two or three vans and a couple of porters can, so watch your rolling 12-month total rather than the tax year alone. The catch for removals is that most customers are private individuals moving house who cannot reclaim VAT, so adding 20% either eats your margin or pushes your quotes above the competition. Against that, registration lets you reclaim VAT on the van, fuel and equipment, which is meaningful for a capital-heavy operation. Most stay under the threshold deliberately; those genuinely scaling should plan the jump rather than stumble into it.
Making Tax Digital for Income Tax replaces the once-a-year return with quarterly digital submissions and a year-end finalisation. The thresholds are based on gross income, not profit:
This matters for removals drivers because the test is on turnover. A man-and-van turning over GBP 55,000 but netting GBP 27,000 after a thirsty van and big fuel bills is still mandated from April 2026 on the GBP 55,000, even though the profit is modest. Instead of pulling a shoebox together each January, you record every job, mile and receipt digitally as you go and send HMRC a summary each quarter. Our guide to MTD for sole traders walks through what that quarterly rhythm looks like in practice.
Switching vehicle method mid-ownership. Once you choose mileage or actual costs for a van, you are locked in for that vehicle. Pick deliberately in year one.
Banking cash without recording it. Cash jobs are the easiest income to forget and the first thing HMRC checks. Log every payment gross as it lands.
Forgetting the trade-specific kit. Blankets, straps, trolleys, goods-in-transit insurance and zone charges are real allowable costs that drivers leave on the table.
Claiming 100% of the van. If the vehicle doubles as the family car, only the business-use share is allowable, and an honest mileage log is what backs it up.
Ignoring CIS on builder work. Site clearance and material moves can be construction operations, and not registering means suffering a 30% deduction instead of 20%.
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