Small business operations often require travel to complete your services or meet with clients. If you need to drive for your business, it’s important to maintain a record of your mileage for tax purposes. But recording mileage can seem overwhelming and tedious. So, how can you do it and why is it important? 

In this guide, you’ll learn:  

  • Why it’s important to record your business mileage 
  • How to manage your mileage records well 
  • How to simplify your bookkeeping

Why it’s important to record your business mileage 

When travel is necessary for your business operations, you can deduct these miles from your taxable income. You can claim this with cars, vans, motorcycles, and even bicycles you use for business purposes. So, knowing how to record business mileage is important if you want to save money on your taxes. As a result, you can avoid paying unnecessary amounts and keep more of your earnings. 

But if you want to deduct your mileage to reduce your taxes, you’ll need to keep accurate and updated records. Though the HMRC doesn’t require it, mileage is crucial for complete tax reporting, and you should keep these records for about five years. Without records, you can’t claim the tax relief. The HMRC won’t let you estimate mileage; you’ll need to report clear proof and exact mileage. You’ll need a log of when, where, and why you travel. 

How to manage your business mileage records well 

You’ll need to know how to record your business mileage to earn these tax benefits. To keep good records, you’ll need to consider a few things. 

Which trips to record

If you want to record your mileage properly, you’ll need to know which trips you can claim. Business travel can include driving to meetings or jobs, running business-related errands, and necessary trips with clients. Overall, the trip must be essential for your business operations to have it in your mileage log. 

Recording personal vehicles vs company vehicles 

How much business mileage you can claim depends on what kind of business you have. For example, limited companies may have business vehicles. These vehicles are easier to record mileage for since they’re solely for your business. For the first 10,000 miles of travel for company cars, you can claim 45p per mile for cars and vans, 24p for motorcycles, and 20p for bicycles. 

But, sole traders may drive a personal vehicle for business purposes. In this case, you’ll need records of the specific journeys you took for your company, and claim each car you used. As a sole trader, you can use simplified expenses to claim flare rate mileage, which is 45p per mile for all cars or goods vehicles and 24p for motorcycles (for the first 10,000 miles). 

What information to record 

When recording your business mileage, you will need to keep track of a few details, including: 

  • The starting location of your journey 
  • The ending location of your journey 
  • Your car mileage at the beginning and end of your trip (to calculate the total miles travelled)
  • The purpose of travel 
  • The date and time of travel 

When referencing the mileage rates for your business’s total mileage, you can use your log to calculate how much mileage you can claim from each trip. For example, say you’re an event planner with a limited company who travels a lot for business. If you travel under 10,000 miles in one year, you can claim 45p for each mile you drive your vehicle. One trip of 20 miles to meet with a vendor allows you to claim 20 x .45 in mileage, or £9. 

To maintain precise records, update your mileage as soon as possible. With regularly updated records, you can keep the necessary details for tax reporting. So, try updating your records during each trip or every couple of days to stay on top of things. 

Picking a record-keeping method 

Once you know how to record business mileage, you can create a system. You could do this with paper records in a notebook, but it’s also helpful to digitise these records. For example, you could transfer your mileage record to a spreadsheet. Or, you could use a mileage tracking system that simplifies the process for you, such as MileIQ or Hurdlr

Whichever method you choose, you will need to stick to it until you replace the vehicle. Then, with an established system, you can stay on top of your mileage and save during tax season. 

Simplify your financial records and more with Countingup 

You’ll need updated and organised financial records to prepare for your business taxes. But, financial management can be stressful and time-consuming when you’re self-employed. That’s why thousands of business owners use the Countingup app to make their financial admin easier. 

Countingup is the business current account with built-in accounting software that allows you to manage all your financial data in one place. With features like automatic expense categorisation, invoicing on the go, receipt capture tools, and cash flow insights, you can confidently keep on top of your business finances wherever you are. 

Plus, the Countingup app offers tax estimates so you can avoid surprises and plan ahead for your taxes. Plus the app’s features help you find tax-deductible expenses to lower your tax bill. Countingup is also Making Tax Digital compliant, helping you to digitise your records and automatically calculate VAT on transactions. It’s designed to make your tax process easier to manage. 

You can also share your bookkeeping with your accountant instantly without worrying about duplication errors, data lags or inaccuracies. Seamless, simple, and straightforward! 

Start your three-month free trial today. 

Find out more here.