A Guide to Mileage Expenses: Rates, Rules, and Record-Keeping
If you use your personal vehicle for business, you can claim mileage expenses to reduce your tax bill—and it's one of the most common deductions claimed incorrectly. Getting a guide to mileage expenses right means understanding what qualifies, what rates HMRC allows, and what records you need to keep. Get it wrong, and you could face penalties. Get it right, and the tax savings accumulate quickly.
Mileage expense tracking comes down to three things: the approved rates, what journeys qualify, and the discipline to record everything. This guide walks you through each, with the rules and real-world edge cases that trip people up.
HMRC Approved Mileage Rates
HMRC publishes Approved Mileage Allowance Payment (AMAP) rates that determine how much you can claim per business mile. These rates are fixed by HMRC regardless of your actual vehicle costs.
Cars and vans
| Miles per tax year | Rate per mile |
|---|---|
| First 10,000 miles | 45p |
| Over 10,000 miles | 25p |
Motorcycles
| Miles per tax year | Rate per mile |
|---|---|
| All miles | 24p |
Bicycles
| Miles per tax year | Rate per mile |
|---|---|
| All miles | 20p |
The key quirk: the rate drops from 45p to 25p after you hit 10,000 business miles in a tax year. Whether you drive a hatchback or an SUV, the rate is the same. The allowance is designed to cover fuel, insurance, road tax, maintenance, and depreciation—all bundled into one figure per mile. Once you use the mileage rate, you cannot claim those same costs separately as allowable business expenses.
Passenger rates
If you carry a passenger who is also travelling for business, you can claim an additional 5p per mile for each passenger. This sits on top of your main mileage rate. Straightforward, but easy to forget if you're carpooling to meetings.
What Counts as a Business Journey?
This is where most people slip up. Not every journey in your car counts, even if you're thinking about work the whole time.
Qualifying journeys
- Travelling to a client's premises
- Visiting a supplier
- Going to a meeting at a location that is not your regular workplace
- Travelling between different work locations
- Collecting supplies or materials
- Attending training courses related to your business
- Going to the bank to reconcile business accounts or deposit takings
Journeys that do NOT qualify
Commuting is the big one. Your regular journey from home to your usual office does not count as business mileage, even though you need to make it for work. That's private mileage. It's the single most common mistake, and HMRC scrutinizes it hard.
Stopping at the supermarket on the way back from a client meeting does not retroactively make the supermarket trip a business journey. Only journeys with a genuine business purpose qualify.
The home office exception
If your home is your principal place of work and you do not have a separate office, journeys from home to clients, suppliers, or other business locations count as business mileage. This is because your "commute" is effectively zero—your workplace is your home.
This distinction matters. Rent an office and drive there every day? That's commuting (not claimable). Work from home and drive to a client? That's a business journey (claimable).
Mileage Rates vs Actual Costs
You have two routes to claiming vehicle costs. Choose one per vehicle and stick with it.
Option 1: Mileage rates (simplified expenses)
Use HMRC's approved rates. You only track your business miles, not your actual costs.
Advantages:
- Simple record-keeping
- No need to chase down fuel receipts, insurance documents, or servicing bills
- Often better for lower-mileage drivers (the 45p rate is generous for short journeys)
Disadvantages:
- Cannot claim actual vehicle costs separately
- The 25p rate for miles over 10,000 is quite low
- If you own an expensive vehicle or drive lots of business miles, actual costs might yield a bigger claim
Option 2: Actual costs
Track every cost (fuel, insurance, road tax, servicing, repairs, depreciation) and claim the business proportion.
Business proportion = (business miles / total miles) × total costs.
Advantages:
- Can yield a larger claim for high-mileage drivers or expensive vehicles
- Reflects actual costs more accurately
Disadvantages:
- Heavy record-keeping burden
- Must track every journey (business and personal) and every expense
- Once you choose actual costs for a vehicle, switching back to mileage rates is not allowed
Which to choose?
For most small business owners, HMRC's simplified expenses guidance confirms the mileage rate is the better bet. It's simpler, it's accepted without fuss, and for vehicles driven under 15,000 business miles per year, it often yields a reasonable claim.
If you drive significant business miles (10,000+) or own a particularly expensive vehicle, calculate both methods before year-end. The higher deduction wins.
Record-Keeping: What HMRC Actually Needs
HMRC does not ask you to file your mileage log with your tax return, but they will ask for it if they investigate. Keeping proper records is non-negotiable.
Your log should record:
- Date of the journey
- From and to locations (specific: "London office to Bristol client HQ", not "work")
- Purpose (the business reason)
- Distance (miles driven)
Methods of tracking
Mileage book — A physical notebook in your car. Simple, but easy to forget entries if you're busy.
Spreadsheet — A digital log updated daily or weekly. More organized, but still manual.
Mileage tracking app — Uses GPS to automatically log journeys; you classify each as business or personal. Least effort, most accurate. (Your phone is already tracking this; these apps just harvest the data.)
Accounting software — Some platforms include mileage modules that log journeys and auto-calculate the claim at the correct HMRC rate.
Record-keeping best practice
- Log at the time. Do not reconstruct your mileage log in March from memory. You will miss journeys.
- Be specific. "Client meeting with ABC Ltd to review Q2 results" beats "Meeting". HMRC appreciates detail.
- Round down, not up. If the distance is uncertain, claim less rather than more.
- Keep corroborating evidence. Email confirmations, diary entries, and meeting notes back up your log if HMRC inquires.
Special Cases and Edge Cases
Mileage for employees
If your employees use personal vehicles for business, reimburse them at up to the AMAP rates. If you pay less, they can claim tax relief for the difference.
For example: an employee drives 5,000 business miles, you reimburse at 30p per mile (£1,500), but the AMAP rate is 45p (£2,250). They can claim tax relief on the £750 shortfall.
If you pay above AMAP rates, the excess is a taxable benefit and must be reported to HMRC.
Electric and hybrid vehicles
Electric, hybrid, and petrol/diesel vehicles use the same AMAP rates. A Tesla or a Nissan Leaf both claim 45p per mile for the first 10,000 miles. This makes electric vehicles particularly tax-efficient for business use—your actual running cost is lower than the allowance, so you pocket the difference.
Company cars
Company cars follow different rules entirely. You do not use AMAP rates. Instead, if you're running a small business as a limited company, HMRC publishes Advisory Fuel Rates (AFR) that vary by engine size and fuel type. Check the latest HMRC guidance for current AFR rates if you have a company car.
Avoid These Common Mistakes
Claiming commuting as business mileage. Your regular journey to your usual office does not count. HMRC knows this is the most frequent error and checks it carefully.
No mileage log. Claiming miles without records to back it up is risky. If HMRC asks and you cannot produce a log, the claim is disallowed.
Mixing methods. You cannot claim the mileage rate for some journeys and actual costs for others on the same vehicle. Choose one and stick with it.
Exceeding the AMAP rate. As a sole trader using simplified expenses, you cannot claim more than the approved rate, even if your actual costs are higher. (Switch to actual costs if you need to exceed AMAP.)
Forgetting the 10,000-mile threshold. After 10,000 business miles, the rate drops to 25p. If you cross this threshold mid-year, apply the correct rate for each band.
Frequently Asked Questions
Can I claim mileage if I work from home?
Yes, if your home is your principal place of business. Journeys from home to clients, suppliers, or other business locations are business mileage. Regular journeys to an office you rent are commuting and do not qualify.
What if I use my car for both business and personal driving?
You only claim for business miles. If you drive 15,000 miles total in a year and 6,000 are business, you claim on the 6,000. Using a mileage app helps separate the two automatically.
Do I need to report my mileage log to HMRC?
No, you do not file it with your tax return. But you must keep it and be ready to produce it if HMRC asks. Keep records for at least five years.
Can I claim the mileage rate and actual costs in the same year?
No, not for the same vehicle. You must choose one method per vehicle for the tax year. Switching back and forth is not allowed.
What if I drive a company car?
Company cars use Advisory Fuel Rates (AFR), not AMAP rates. AFR varies by engine size and fuel type. Check HMRC's current guidance for your vehicle.
Are electric vehicles treated differently?
No. A Tesla or Nissan Leaf claims 45p per mile for the first 10,000 miles, same as any other car. This makes electric vehicles tax-efficient for business use.
What happens if I drive over 10,000 business miles?
The rate drops to 25p per mile for miles over 10,000. If you hit 10,500 business miles, you claim: (10,000 × 45p) + (500 × 25p) = £4,625.
Can employees claim mileage relief if I do not reimburse them?
Yes. If you do not reimburse them or reimburse below the AMAP rate, they can claim tax relief for the difference. They can claim up to the AMAP rate, not more.
Next Steps
Mileage expenses are one of the most straightforward tax deductions—but they require discipline from day one. Start logging journeys immediately, use a consistent method, and review your records quarterly to spot gaps.
If you're tracking multiple expense types—mileage, meals, equipment, subscriptions—the challenge becomes managing them all without losing track. How to track business expenses without losing your mind covers the broader strategy for integrating mileage claims with other deductions.
For deposits and business takings, keeping those separate from personal funds makes mileage reconciliation easier. The complete guide to business bank accounts covers account structure and how it supports expense tracking.
Try Relentify's accounting suite free for 14 days and see how integrated mileage tracking simplifies the process. One platform for mileage, invoices, tax deductions, and reconciliation means you're not context-switching between seven apps.