HMRC Mileage Claim Rules Every Sole Trader Should Know

Alan Bermingham

10 Years of Expertise in Fintech Innovation

6 min read

Let’s Break This Down Together...

Ever driven to a client or work site and wondered if you can claim back the cost? Mileage claims can be confusing, especially when you’re unsure which journeys count and how much you can claim.

In this guide, we’ll cover exactly what HMRC mileage allowance relief is, the official rates you can use, which trips qualify, and how to keep records that HMRC will accept. You’ll also see the common mistakes to avoid so you can claim with confidence.

By the end, you’ll know how to maximise your tax relief, avoid missing out on money you’re entitled to, and stay on the right side of HMRC. Let’s dive in!

How HMRC Mileage Claims Work

HMRC has set rates that determine how much you can claim per business mile. These are known as the advisory rate and are used to calculate tax-free mileage reimbursement. These rates vary depending on your vehicle type and how many miles you’ve already claimed in the tax year.

For cars and vans, you can claim 45p per mile for the first 10,000 miles in each tax year. After that, the rate drops to 25p per mile. Despite rising costs, these HMRC mileage rates haven’t changed for years!

Motorcycle users get a flat rate of 24p per mile. Cyclists can claim 20p per mile. Neither of these mileage allowances reduce regardless of distance travelled.

If you’re giving colleagues a lift for business journeys, you can claim an extra 5p per mile for each passenger. It’s a nice little bonus for being environmentally friendly!

Per Mile Rates

HMRC sets specific per mile rates for mileage allowance relief, which are designed to fairly cover the costs of business travel. For the 2024 tax year, the approved mileage rates are:

- Cars and vans: 45p per mile for the first 10,000 business miles, then 25p per mile for any additional miles in the same tax year.

- Motorcycles: 24p per mile, regardless of distance.

- Bicycles: 20p per mile, regardless of distance.

These mileage rates are intended to cover not just fuel, but also wear and tear, insurance, and other running costs associated with business mileage. If your employer reimburses you at a lower rate than these approved mileage rates, you can claim the difference as mileage allowance relief. If you’re self employed, you can use these rates to calculate your business travel expenses for your self assessment tax return.

Employers can also use these rates to reimburse employees for business miles driven, ensuring payments are tax free up to the approved mileage. Remember, the first 10,000 business miles in a tax year are reimbursed at the higher rate for cars and vans, so it pays to keep track of your total business miles driven.

What Journeys Can You Claim For?

Not all work-related driving qualifies for mileage claims. Only the business use portion of your vehicle's mileage is eligible for claims. The golden rule is that your regular commute to your permanent workplace doesn’t count. HMRC considers this private travel.

Trips to temporary workplaces, client visits, and travelling between different work sites all qualify. You can claim mileage expenses for these journeys. Business errands like going to the post office or picking up supplies count too.

If you work from home and travel to meetings or client sites, these journeys typically qualify as business mileage. You may be able to claim mileage tax relief for these trips. They’re not part of your regular commuting pattern.

Mileage Tracking and Records

Accurate mileage tracking is the backbone of a successful mileage allowance relief claim. Whether you’re an employee, self employed, or running a small business, you need to keep detailed records of every business trip you make. This means logging the date, start and end locations, total business miles, and the purpose of each journey.

You can keep these records in a traditional mileage logbook, a spreadsheet, or—more conveniently—use a mileage tracking app that automatically records your business mileage. Many apps use GPS to track your journeys, making it easy to separate business trips from personal travel and generate reports for your self assessment tax return.

For self employed individuals, accurate mileage logs are essential for your assessment tax return, ensuring you claim the correct amount of mileage allowance relief and stay compliant. Good record-keeping not only supports your claim but also gives you peace of mind if HMRC ever asks for evidence.

How To Make Your Claim

The way you claim depends on your employment status. If your employer reimburses you at or above the HMRC rates, you don’t need to do anything. It’s already tax-free.

If your employer pays less than the approved rates (or nothing at all), you can claim Mileage Allowance Relief. Do this through your Self Assessment tax return or by filling in form P87 for smaller claims.

Self-employed? You’ll claim your business mileage as a travel expense on your Self Assessment tax return. You can either use the simplified mileage rates or calculate the actual cost of running your vehicle, including fuel costs. Different rules apply for company cars and company vehicles—employees using a company car may have different claim procedures than those using their own vehicles.

Good record-keeping is essential whichever method you use. Note the date, locations, mileage, and purpose of each business journey. You should keep records for all own cars and own vehicles used for business.

Common Pitfalls To Avoid

The biggest mistake people make is trying to claim for their normal commute. HMRC is very clear that travel to your permanent workplace isn't eligible, no matter the distance.

Another common error is not keeping proper records. A vague estimate of "about 5,000 business miles" won't suffice if HMRC asks questions. You need specific journey details.

Watch out for the 10,000-mile threshold for cars and vans. The rate drops from 45p to 25p after that point. Using the wrong rate could lead to problems if you're checked.

Some people forget they can claim for business journeys that don't start from their workplace. Going straight from home to a client counts too, as long as it's not part of your regular commute.

Final Thoughts

HMRC mileage claims offer straightforward tax relief on the costs of using your own vehicle for business. Understanding what journeys qualify and keeping good records is key.

The rates are generous enough to cover most vehicle running costs, especially for the first 10,000 miles. Make sure you're claiming everything you're entitled to. It's not a grey area, it's your right!

Remember that rules and rates can change. It's worth checking for updates at the start of each tax year. A little attention to detail can save you a significant amount of tax.

Simplifying HMRC Mileage Claim Tax

Getting your mileage claims right shouldn't be a hassle when you're already busy with work. Pie makes it simple with smart technology designed for UK taxpayers.

We calculate your allowable claims instantly, showing you exactly how much tax you can save. This ensures you never miss out on what you're rightfully owed.

All your journey details are stored securely in one place, creating HMRC-compliant records. These include dates, mileage, destinations and business purposes.