Mileage tax relief: what can I claim?

Run the numbers on a typical working week and it soon becomes clear how much money you might be spending on fuel — often, it’s more than you think.

HMRC’s mileage tax relief system is a way of fixing that. It lets sole traders and company directors claim a set rate for every business mile driven, covering fuel, but also insurance, depreciation, and general wear and tear on your vehicle. 

If you’re driving to work or using your car for work purposes, this guide will help you understand how mileage tax deduction works. 

Key takeaways:

• HMRC lets you claim 45p per mile for the first 10,000 business miles each year, dropping to 25p after that 
• Journeys must be wholly and exclusively for business 
• Sole traders and directors have slightly different rules, but both can benefit from mileage tax relief
• A new pay–per–mile tax (eVED) is coming for electric and plug–in hybrid vehicles from April 2028

Yes! Mileage tax relief is one of the more straightforward tax wins available to small business owners. 

HMRC allows you to claim a set amount for every business mile you travel, designed to cover everything from fuel to general wear and tear on your vehicle. 

These are called approved mileage allowance payments (AMAPs). For cars and vans, the rate is 45p per mile for the first 10,000 miles each tax year, dropping to 25p per mile after that. Motorcycles are paid at 24p per mile, and bicycles at 20p per mile.

Here’s a snapshot of the rates for the current tax year (2026/2027):

Vehicle type	First 10,000 business miles (in the tax year)	Each business mile over 10,000 (in the tax year)
Cars and vans	45p	25p
Motorcycles	24p	24p
Bicycles	20p	20p

HMRC has one important rule to keep in mind: the journeys you make must be wholly and exclusively for business. Let’s look at what that means:

• Popping to the shops on the way home from a client visit? This isn’t wholly and exclusively for business. Doesn’t count. Even if those snacks are for the office
• A straight trip back and forth to meet a supplier? Very much wholly and exclusively for business. Absolutely counts

There’s also a handy passenger rate worth knowing about. 

If you travel with colleagues from the same company, the driver can claim an additional 5p per mile, per passenger. It’s a small bonus, but it adds up over time.

This is where mileage tax deduction rules get a little different depending on whether you’re a sole trader or a limited company director. Let’s look at the difference.

Sole traders 

• You can use HMRC’s simplified mileage rate (the AMAPs detailed above) to claim mileage via your self-assessment tax return
• This is the easiest route because you don’t need to record every fuel receipt, just your business miles and the dates you travelled
• Alternatively, you can calculate every detail of your real motoring costs (including fuel, insurance, maintenance and depreciation) and report it with receipts 

It doesn’t matter which method you choose, but once you’ve started, you have to stick with it.

Directors of limited companies 

• You can be reimbursed by your company for business mileage at the AMAP rate above — tax–free
• If your company reimburses at a lower rate than HMRC’s advisory allowance, you can claim mileage allowance relief from HMRC on the difference
• This means that even if your company isn’t topping you up to the full rate, you’re not necessarily out of pocket

Good to know: Despite rising fuel costs, HMRC’s mileage tax relief rate has remained fixed since 2011. So, if you’re driving a lot of business miles, it’s especially important to claim every penny you’re entitled to.

The rules shift a bit here. 

If you’re using a company car, you cannot use the standard AMAPs rates. These are designed for personal vehicles only. Instead, HMRC uses advisory fuel rates (AFRs). You use these rates when you either:

• Reimburse employees for business travel in their company cars
• Need employees to repay the cost of fuel used for private travel

The rate you use is based on your company car’s fuel type and engine size. If your car is more fuel efficient, because you use a hybrid or electric car, or if the cost of your business travel is higher than the guideline rates, you can use your own rates to reflect your situation.

For example, these are the current advisory fuel rates for petrol, based on current fuel prices (April 2026):

Engine size (cc)	Rate per mile
1400cc or less	13p
1401cc to 2000cc	15p
Over 2000cc	24p

Now compare this to the current advisory fuel rate for electric cars:

Charging location	Advisory electric rate
Home charger	7p
Public charger	15p

These rates are updated quarterly by HMRC to reflect changing energy and fuel prices. While they provide a steady baseline for most, certain specialised businesses, like those operating mobile kitchens, need to look a little closer at the specifics.

Can food trucks claim mileage? 
Yes — but note that the above advisory rates don’t apply. This is because your food truck isn’t technically a company–provided car. But you can still claim mileage. You just have to choose between the simplified AMAPs method or the actual costs method for claiming. 

For food trucks, because your vehicle is usually quite heavy (often exceeding 3.5 tonnes), with higher fuel and maintenance costs, the actual costs method can usually save you more than HMRC’s flat mileage rate. 

However, you’ll only be able to claim the journey to temporary workplaces, like street pitches or private events, not permanent spaces. But for most food truck businesses, this shouldn’t be a problem, and it means the mileage from your home to the site is usually claimable.

Just remember to keep a log of everything you spend on your food truck, from fuel and repairs to insurance. If HMRC asks to see your records, which they may, they’ll want to see dates, destinations, and business miles.

If you’re not sure what’s best for you, speak to an accountant to find the most tax–efficient approach for your situation. Learn more about how to start a food truck business in the UK. 

The key to claiming mileage tax relief is keeping good records. HMRC doesn’t routinely ask to see these, but they will if there’s ever a reason to get in touch about your taxes. 

You need to hold onto any records for at least five years after the relevant tax year.

A proper mileage log should include:

• The date of each journey
• The start and end point
• The purpose of the trip
• The total miles travelled

Once you’ve got your records in order, how you claim differs depending on whether you’re a sole trader or limited company director. 

If you’re a sole trader:

• You include your mileage expenses as part of your self assessment tax return — it sits under business expenses

If you’re a director: 

• Your company claims the cost as a business expense
• If the company’s been reimbursing you at less than the AMAP rate, you can claim mileage allowance relief via your self assessment tax return

There are a few situations where claiming mileage on taxes isn’t possible.

1. Commuting: travelling from your home to your regular, permanent workplace doesn’t count as business mileage — even if it feels like work travel
2. Any journey that’s primarily personal: even if there’s a small work element involved, you can’t claim the journey
3. Full reimbursement: if your employer already reimburses you at the full AMAP rate, there’s no difference left to claim

Remember, if you’re a sole trader who has already claimed your actual vehicle costs, rather than using the simplified AMAPs method for a particular vehicle, you can’t switch to AMAPs. 

If you drive an electric or plug–in hybrid vehicle for business, then this section is for you. 

You may have heard rumblings about a new pay–per–mile road tax. Ultimately, the government is introducing this new tax to address the falling revenue from fuel duty as drivers switch from petrol/diesel to electric.

Here’s a rundown of what to expect:

• From April 2028, drivers of electric and plug–in hybrid cars will be subject to a new pay–per–mile electric vehicle excise duty (eVED) system
• This is an additional charge on top of any existing vehicle excise duty (VED) you may already pay
• Under the new rules, electric car drivers will pay 3p per mile, while plug–in hybrid drivers will pay 1.5p per mile

For example: if you drive an electric vehicle and typically drive 10,000 miles a year, you’ll pay an extra £300 in tax annually.

So, how does it work?

The current proposal suggests that: 

• Payment: your eVED amount will be paid monthly or annually based on an estimate of your mileage
• No GPS tracking: your mileage will be confirmed through MOT odometer readings and self–reported updates.

The rules around how eVED interacts with business mileage claims are still being worked out, so it’s worth keeping an eye on HMRC guidance as 2028 approaches.

Plus, on 25 March 2026, the Treasury announced that AMAP rates would be reviewed ahead of the future Budget, with a focus on helping people who rely on their cars for work. So, changes to the 45p allowance itself may also be on the horizon. It’s something to keep an eye on.

If your limited company provides you with a car that’s available for personal use, you’ll pay what’s known as benefit-in-kind (BiK) tax. 

This applies to company directors as well as employees. Basically, HMRC considers the car a benefit that needs to be taxed.

BiK tax is calculated using the vehicle’s P11D value (its list price when new), its CO2 emissions, and your income tax band. The formula is: 

P11D value × BiK percentage = taxable benefit

Then, taxable benefit × your tax rate = annual tax

Different cars have different BiK percentages. For example:

• Pure electric vehicles with zero CO2 emissions have a BiK rate of just 4% in 2026/2027. This makes them extremely tax–efficient as company cars
• A high–emission petrol car’s percentage can be as high as 37%

If you’re a director who’s a basic rate taxpayer, the difference in annual tax between an electric vehicle and a petrol car can be thousands of pounds.

If you’re a sole trader, it’s worth noting that you can’t have a company car in the same sense as a company director because there’s no company to own it. Instead, you can claim mileage on your personal vehicle using the AMAP rates we talked about earlier.

One last thing on company cars: for companies with just one director and shareholder, or companies with a small number of employees, it might not always be tax–efficient to have a company car. Sometimes claiming mileage for business travel is the better option. If you’re not sure which route is right for you, it’s worth running the numbers with an accountant.

Ultimately, when it comes to mileage tax relief, the principle is: claim what you’re entitled to. 

For most sole traders and directors, mileage tax relief is one of the most reliable and straightforward business expenses available. After all, you’ve already done the driving, you might as well get something back for it.

If you’re just getting started on your business journey, or you’re a sole trader who wants to make your business official, check out our company registration service. Our team will handle the Companies House application for you — and your new company will be up and running within 24 hours. 

In the meantime, if you’re racking up business miles on the road, we hope you now feel more confident about claiming them. 

Yes. Since April 2025, electric vehicles are no longer exempt from vehicle excise duty (VED). New electric cars registered from April 2025 pay just £10 in their first year, then the full standard rate of £200 per year from the second year onwards — the same as a petrol or diesel car.

If you’re a sole trader, you claim mileage as a business expense on your self assessment tax return. If you’re a director who’s been reimbursed at below the AMAP rate, you can claim mileage allowance relief through self assessment too. Keep a mileage log with dates, destinations, journey purposes, and distances. HMRC may ask for this if they ever query your claims.

Yes, in a couple of ways. You can either use HMRC’s simplified mileage rate (45p per mile for the first 10,000 miles in a car or van), which covers fuel plus other running costs, or you can claim your actual motoring expenses — including petrol, insurance, and maintenance — based on the proportion of business use. Taxi drivers have their own specific rules around this — check out our guide on can taxi drivers claim mileage? for more detail.