Let's Break it down
As a contract tech worker, you can claim for business miles driven in your own vehicle. This includes journeys between your home and temporary workplaces (under 24 months).Travel between different client sites on the same day counts too.
Additionally, trips to meetings, training sessions, or networking events are all claimable. Emergency call-outs to fix systems or provide technical support qualify. Even travel to pick up equipment or supplies for client projects counts.
Journeys to co-working spaces when working for clients are also covered under IR35 IT contractor self-assessment rules. The key is that these must be genuine business trips, not regular commuting.
How much can you actually claim per mile in 2024?
HMRC's approved mileage rates are surprisingly generous. You get 45p for your first 10,000 business miles each tax year. After that, the rate drops to 25p per mile. These rates cover fuel, insurance, MOT, servicing, and depreciation.
No need to keep fuel receipts when using approved rates. Furthermore, you can claim for cars, vans, motorbikes, and even bicycles. Electric vehicles get the same rates as petrol or diesel cars. The higher rate covers most vehicle running costs completely.
Many contractors find they actually make a small profit on these rates. I've personally saved over £2,000 annually just through proper mileage claims.
Which journeys can't you claim for?
Regular commuting to a permanent workplace doesn't count. If you've been at the same site for over 24 months, it's permanent. Personal trips mixed with business travel aren't allowed. Additionally, journeys where the client reimburses your travel costs are off-limits.
Driving to social events that aren't genuine business networking won't fly. Detours for personal errands during business trips must be excluded. Travel that's already covered by a company car allowance is a no-go. HMRC takes a dim view of anyone trying to claim personal miles.
What records do you need to keep HMRC happy?
Start and end locations for every business journey are essential. Record your mileage reading at the beginning and end of each tax year. Note the purpose of each trip with client or project details. Keep dates and total miles for each business journey.
A simple spreadsheet or mileage tracking app works perfectly fine, especially when aligned with a Making Tax Digital IT contractor MTD checklist. However, hold onto records for at least 5 years after filing. Some contractors snap photos of their odometer for extra proof. The more detail you keep, the easier any HMRC enquiry becomes.
Should you use actual costs instead of mileage rates?
Actual costs are only worthwhile if they exceed HMRC rates. This method requires keeping every single motoring receipt. You must calculate business versus personal use percentage accurately. Additionally, track fuel, insurance, repairs, depreciation - everything.
Most contractors find mileage rates simpler and more profitable. Consider actual costs only for expensive vehicles or very high mileage. Remember, you can't switch methods mid-year once you've chosen. The administrative burden rarely justifies the potential extra savings.
How do you actually claim these expenses on your tax return?
Self-employed contractors include mileage in business expenses on the SA103 form. Limited company contractors claim as a business expense through their company. Keep a running total throughout the year for easier filing. Simply multiply total business miles by the appropriate HMRC rate.
Include a brief description of travel purpose on your return. Consider professional help, such as guidance for fractional CTO self-assessment UK contractors, if your situation gets tricky. Pie is the UK's first personal tax app for working individuals. It offers integrated bookkeeping and real-time tax figures.
The app simplifies tax return processing with timely expert advice. Many contractors find it transforms their tax filing experience completely.
Final Summary
Mileage claims can significantly reduce your tax bill as a contract tech worker. The key is understanding which journeys qualify and keeping accurate records. HMRC's approved rates are generous and cover most vehicle costs completely.
Start tracking your business mileage today and watch your tax savings add up. Ready to simplify your contractor taxes? Check out Pie tax for effortless mileage tracking and tax filing.
