Mileage Allowance for Self-Employed: What Sole Traders Need to Know

Who Can Claim Mileage Allowance

The mileage allowance scheme is specifically designed for self-employed workers, including sole traders, who use their personal vehicles for work-related travel. If you use a car, van, motorcycle, or bicycle to travel to different job locations, customer sites, or supplier meetings, you may be eligible to claim mileage.

To qualify, the journey must be wholly and exclusively for business purposes. This means the travel must be necessary for the operation of your business. For example, a mobile hairdresser driving to a client’s home or a freelance photographer traveling to a shoot location can claim those miles.

However, not all travel counts. Commuting from your home to a regular place of work is considered a personal expense and is not eligible. Only trips to temporary workplaces or between different work sites qualify under HMRC guidelines.

Mileage Rates Applicable to Sole Traders

HMRC sets fixed mileage rates for different types of vehicles used for business travel:

• 45 pence per mile for the first 10,000 miles driven in a car or van each tax year
• 25 pence per mile for any miles driven beyond the initial 10,000
• 24 pence per mile for business journeys undertaken using a motorcycle
• An additional 5 pence per mile for each additional passenger who also works for your business

These rates are designed to cover the full cost of using your vehicle for work, including fuel, insurance, maintenance, and road tax. If you claim mileage allowance, you cannot claim separate deductions for these expenses.

This method can only be applied if you have not claimed capital allowances on the vehicle. Once you start using mileage allowance for a specific vehicle, you must continue using it for that vehicle for as long as it remains in your business.

Business vs Personal Journeys

It’s important to distinguish between business and personal travel when claiming mileage allowance. A business journey is one that is necessary to perform your work activities. This includes traveling to meet clients, going to a temporary work location, or picking up work-related materials.

Personal travel, including regular commutes between your home and a permanent office or workspace, is not eligible. The rules are strict, and making claims for personal travel can lead to penalties if audited by HMRC.

A temporary workplace is defined as one where you work for less than 24 months or is not your main base of operation. For instance, a tradesperson who visits different job sites daily can claim travel to each site. But if you rent an office and travel there from home each day, that is classed as a commute and is not claimable.

The Mileage Allowance System vs Actual Cost Method

Sole traders have two main options for claiming vehicle expenses: mileage allowance or the actual cost method. Each has its benefits, but they operate differently.

The mileage allowance method is simpler. You keep a log of business miles and apply HMRC’s fixed rates to calculate your deductible expense. This is easier for many self-employed people, particularly those with lower mileage or those who prefer not to manage detailed expense records.

The actual cost method involves recording every vehicle expense, including fuel, insurance, repairs, and servicing. You must then calculate what percentage of your total driving is for business purposes and apply that proportion to the total expenses. This method can be beneficial for those with high running costs or low business mileage.

However, if you use the actual cost method, you must retain detailed records and receipts, and the process can be more time-consuming. Once you choose a method for a particular vehicle, you must stick with it for the duration you use that vehicle in your business.

Common Misconceptions

There are several misconceptions about mileage allowance that can lead to errors or disallowed claims:

• Some believe all vehicle use related to work can be claimed, but only journeys that are wholly for business count.
• It’s a common mistake to think you can claim both mileage allowance and other vehicle costs such as insurance and maintenance. These are already covered by the mileage rate.
• People often underestimate the importance of recordkeeping. While you do not need to submit documentation when filing your tax return, HMRC can request proof at any time.
• Others assume short journeys don’t qualify, but even trips of less than a mile are eligible if they meet the criteria.

Understanding these points helps reduce the risk of submitting incorrect claims and facing potential penalties.

Using More Than One Vehicle

If your business uses more than one vehicle, you can apply different methods to each. For example, you might use the mileage allowance method for your car and the actual cost method for your motorcycle. This flexibility allows you to tailor your expense reporting in a way that maximises efficiency and tax relief.

However, the same rule applies: once you choose a method for a particular vehicle, it must remain consistent for that vehicle. You cannot switch back and forth from year to year.

Mileage for Passengers

You can claim an extra 5 pence per mile for each business passenger you carry. The passenger must be employed by your business and be traveling with you for business purposes. This additional claim is especially useful for sole traders who occasionally work with assistants or subcontractors and travel together to work sites.

The additional passenger allowance helps cover the added costs of transporting another person, such as increased fuel consumption and wear and tear.

Combining Methods Within the Business

Although you can’t switch methods for a single vehicle, you can mix approaches within your business if you operate more than one vehicle. For example, you might find it beneficial to use the actual cost method for a high-maintenance commercial van and the mileage allowance for a second, lower-use vehicle.

This mixed approach can provide flexibility and help maximise deductions while keeping the administrative workload manageable.

The Long-Term Commitment

Opting into the mileage allowance system for a vehicle is a long-term decision. Once you begin using this method, you are committed to it for the life of the vehicle within your business. This rule prevents opportunistic switching based on which method is more financially beneficial in a given year.

This makes it important to consider your future business use and anticipated costs before deciding on your expense method. If your vehicle is relatively inexpensive to operate or you do not travel large distances for business, mileage allowance may offer the best balance of simplicity and tax relief.

Key Considerations Before Claiming

Before you start claiming mileage allowance, you should evaluate your specific circumstances:

• How many miles do you drive annually for business purposes?
• What are your vehicle’s average running costs?
• Do you want to keep detailed records or prefer a simplified method?
• Have you already claimed capital allowances for the vehicle?

These factors can help determine which method—mileage or actual cost—will provide the most benefit.

Tracking and Recording Business Mileage Efficiently

Tracking and recording business mileage is an essential task for any sole trader who wishes to claim mileage allowance and optimize their allowable expenses. Proper mileage logging not only ensures compliance with HMRC requirements but also helps maximise your tax relief while providing clarity over the operational costs of your business.

Failing to accurately record your mileage can result in underclaiming legitimate business expenses or, worse, overclaiming and facing potential scrutiny during an HMRC audit. For this reason, developing an efficient system to track and store journey details is a fundamental part of self-employed financial management.

The mileage allowance series focuses on how to efficiently record business journeys, what information is necessary, which tools and practices are recommended, and how to manage both digital and manual records. By the end, you will understand how to implement a mileage recording process that suits your business operations and supports reliable tax reporting.

Why Accurate Mileage Tracking Matters

Every business-related mile you travel adds to your claimable expenses, which directly reduces your taxable profits. For self-employed individuals operating under the mileage allowance system, each recorded mile counts—especially during periods of high business activity.

Accurate tracking provides the following benefits:

• It ensures that all eligible business journeys are claimed
• It protects against non-compliance during an audit
• It enables better planning of fuel and travel budgets
• It helps distinguish personal from business travel, ensuring clear boundaries in your records

Incomplete or estimated mileage logs can weaken your position if HMRC requests evidence. Therefore, maintaining detailed and consistent records is critical.

What Information to Record

When tracking mileage, it’s important to record specific details for each business journey. HMRC expects the following information to be included in your mileage log:

• The date of the journey
• The starting location and destination
• The purpose of the trip (business reason)
• The number of miles travelled
• The type of vehicle used (if using multiple vehicles)

If you carry a business passenger, it’s also advisable to note their name and role in the business, especially if you plan to claim the additional 5 pence per mile for carrying an employee or assistant.

For recurring trips to the same client or location, you may record a representative sample, provided the trips are consistent and regular. For example, if you visit the same job site five days a week for two months, you could document one typical week and apply the pattern, noting that the journeys were repeated over that period.

Choosing the Right Tracking Method

There are several methods you can use to track mileage, each with its pros and cons. The best choice depends on the size of your business, the number of journeys made, and your comfort with technology.

Manual Logs

This traditional method involves writing down mileage details in a physical logbook or notebook. It is straightforward and requires no special equipment, but it can be time-consuming and prone to error or loss.

Manual logs work well for low-mileage sole traders who only make occasional business trips and want a basic, low-tech solution. However, regular backups (such as taking photos of log pages) are recommended in case the logbook is lost or damaged.

Spreadsheets

Many sole traders prefer to use spreadsheets such as Microsoft Excel or Google Sheets to log mileage. These allow for easy calculations, organisation, and backups.

Spreadsheets offer more structure than paper logs, and templates can be created to include key fields like date, distance, destination, and purpose. Spreadsheets can also be filtered and analysed, offering insights into travel patterns and costs.

The main advantage of this method is its accessibility and customisability. Spreadsheets can also be saved on cloud storage platforms for added security.

Mobile Apps

For those who prefer automation and convenience, mileage tracking apps are a valuable tool. These apps can track journeys in real time using GPS, automatically logging distances and routes. Most also allow you to categorise trips as business or personal with a single tap.

Popular mileage tracking apps typically offer the following features:

• Automatic journey tracking via GPS
• Trip categorisation (business vs personal)
• Custom mileage rates
• Monthly or annual mileage reports
• Exportable data for tax returns

Using a mobile app can significantly reduce the time spent logging mileage and ensure accuracy. Some apps also integrate with accounting software, simplifying your end-of-year tax filing.

Creating a Consistent Logging Routine

Consistency is essential when recording mileage. To ensure nothing is missed, develop a habit of logging your journeys immediately or at the end of each workday. Delaying entries increases the risk of forgetting trip details or recording them inaccurately.

Here are some tips to build consistency into your mileage tracking:

• Set a daily or weekly reminder to update your mileage log
• Keep your mileage notebook or app readily accessible in your vehicle
• Review and reconcile your mileage records at the end of each week
• Use fuel receipts as prompts to log recent journeys

A consistent approach ensures that your mileage log remains up to date, accurate, and ready for submission at tax time.

Managing Vehicle Usage Across Business and Personal Travel

Most sole traders use their vehicles for both business and personal purposes. Keeping a clear separation between the two types of journeys is important when using the mileage allowance method. You cannot claim mileage for personal travel, such as family errands or holidays. Therefore, when a journey includes both business and personal elements, only the business portion is eligible.

For example, if you drive from your home to a client meeting and then continue to a personal appointment, only the miles from home to the client are claimable. It is essential to note the split in your records to avoid claiming ineligible mileage. Apps that track GPS routes make this easier by allowing you to edit trip segments and classify them correctly.

Estimating Business Mileage: Is It Allowed?

Some sole traders use estimates to calculate their business mileage. While HMRC does accept representative sampling in certain circumstances, relying on estimation for all travel is not recommended.

You may use estimates when:

• The travel pattern is highly consistent and repetitive
• You can demonstrate the basis for your estimate
• You maintain at least some records or receipts to support your claim

For instance, if you visit a job site four days a week for three months and each round trip is 30 miles, you can reasonably claim the total mileage based on this regular pattern. However, the more varied your travel, the less reliable estimation becomes. Keeping at least partial or sample logs is strongly advised to validate any estimated claims.

Storing and Backing Up Your Records

HMRC requires you to keep records of business expenses, including mileage logs, for at least five years after the 31 January submission deadline of the relevant tax year. These records must be accessible in case of an inspection or audit.

To ensure compliance:

• Keep digital or paper copies of mileage logs
• Store logs in a secure but accessible location
• Make regular backups, especially for digital files
• Save email confirmations, appointment records, or calendar entries that support your mileage claims

Mobile apps usually offer cloud backups and export functions, making it easier to safeguard your data. For manual or spreadsheet users, consider using cloud storage platforms like Google Drive or Dropbox.

Incorporating Mileage Tracking Into Your Workflow

To ensure mileage tracking doesn’t become a burdensome task, integrate it into your daily workflow. For example:

• Start your day by checking your schedule and preparing a list of destinations
• Track each trip immediately after arrival or at the end of the day
• Use your calendar app to record client meetings, job visits, or delivery stops, which can help reconstruct travel history

You can also link tracking to other routine tasks. If you regularly track expenses or check your bank account, use that opportunity to review and update mileage logs.

Benefits of Good Mileage Records During Tax Filing

When it’s time to file your Self Assessment tax return, having clear and complete mileage records simplifies the process. You will be able to:

• Calculate your total business miles accurately
• Apply the correct mileage rates for your vehicle type
• Ensure that your figures align with supporting documents
• Reduce the time spent gathering information

Accurate records also serve as a strong defence in case HMRC raises questions about your expense claims. A well-maintained mileage log proves your due diligence and increases the credibility of your return.

Common Errors and How to Avoid Them

Even well-meaning sole traders can make mistakes when tracking mileage. Here are some of the most common issues and tips to avoid them:

• Forgetting to log short trips: Even small journeys count and add up over time
• Mixing up business and personal mileage: Always double-check the purpose of each journey
• Relying solely on fuel receipts: These are not substitutes for mileage logs
• Failing to log round trips: Remember to count return journeys when calculating mileage

Being aware of these pitfalls helps ensure that your records are accurate and defensible.

Best Practices

To make mileage tracking efficient and stress-free, follow these best practices:

• Choose a tracking method that suits your business style
• Record mileage details daily or weekly
• Separate business and personal travel clearly
• Back up all logs and supporting documentation
• Use technology to automate where possible
• Maintain consistency in your approach

These strategies will help you stay compliant with HMRC requirements and ensure that you’re claiming the full amount of allowable mileage expenses available to you.

Reporting Mileage and Expenses in Your Self Assessment

Once you have accurately tracked your business mileage and gathered all relevant expense records, the final step is to report these details as part of your annual Self Assessment tax return. For sole traders, ensuring that mileage claims are recorded correctly and included among your allowable expenses is essential for both reducing your tax bill and staying compliant with HMRC regulations.

We explain how to incorporate mileage allowance into your Self Assessment submission. It covers how to complete the relevant sections of the tax return, what documentation you should have ready, how to combine mileage allowance with other expenses, and common errors to avoid. You will also learn how to respond to HMRC queries if your claims are ever questioned. By understanding how to report mileage correctly, sole traders can ensure they are claiming their full entitlements while avoiding mistakes that could trigger penalties or audits.

Preparing for Your Tax Return

Before filling in your Self Assessment tax return, it is important to gather all financial records for the relevant tax year. The UK tax year runs from 6 April to 5 April the following year, and the submission deadline for online returns is 31 January after the tax year ends.

For mileage allowance, make sure you have:

• A complete log of all business journeys
• Total business mileage for the tax year
• The mileage rates applicable to each journey (cars, vans, or motorbikes)
• Any additional mileage for business passengers

You should also gather supporting documents for other business-related expenses, income records, and any capital investments you have made.

Where to Report Mileage in the Tax Return

As a sole trader, you will complete the main Self Assessment tax return form (SA100) along with the Self-employment (SA103) supplementary pages. This is where you enter details about your business income and expenses.

In the SA103 section, you will be asked to report:

• Your business income (sales, services, commissions, etc.)
• Your allowable business expenses

Mileage allowance is not recorded as a separate item. Instead, it is included under the general category of motor expenses, as a part of your allowable business costs. You can choose to report expenses in one of two ways:

1. Simplified Expenses Method

This method allows you to use HMRC’s flat rates for business mileage. You calculate your total business mileage and apply the correct mileage rates:

• 45p per mile for the first 10,000 miles in a car or van
• 25p per mile for additional miles beyond 10,000
• 24p per mile for motorbike mileage
• 5p per mile for each qualifying passenger (only if applicable)

You then include the total calculated value under the motor expenses category. This method is straightforward and ideal for sole traders who do not wish to keep receipts for fuel, servicing, and other vehicle costs.

2. Actual Cost Method

If you did not opt to use mileage allowance, you can instead claim the actual costs of operating your vehicle. This includes fuel, insurance, servicing, road tax, and repairs. You must retain receipts and evidence for each cost claimed.

Note that you cannot switch between these two methods for the same vehicle. If you begin using mileage allowance for a vehicle, you must continue with that method for as long as you use the vehicle in your business.

Combining Mileage with Other Allowable Expenses

While mileage allowance covers most costs associated with vehicle usage, it does not prevent you from claiming other types of business travel expenses. For example, you can still claim:

• Public transport fares (train, bus, taxi) for business travel
• Parking charges related to business trips
• Toll road and congestion charges

These should be recorded and reported separately from mileage allowance. Be sure to keep all receipts or digital confirmations for these types of expenses.

Other common allowable expenses for sole traders include:

• Office supplies
• Utilities (if working from home)
• Advertising and marketing
• Professional subscriptions
• Bank fees and charges related to the business

Mileage should be claimed only once—either as a flat-rate allowance or actual cost—not both.

Using Software or Filing Manually

There are two primary ways to complete your Self Assessment tax return:

Online Filing

Most sole traders now file their tax returns online through HMRC’s official portal. The online system guides you step-by-step through each section. When entering your business expenses, you will find a section labeled ‘Self-employment (short)’ or ‘Self-employment (full)’, depending on your circumstances.

In either case, the online system will ask you to enter total expenses under various headings, including ‘car, van and travel expenses’. You should include your mileage allowance total here.

The online filing system automatically calculates your tax liability once all income and expense figures are entered.

Paper Filing

Paper returns (SA100 and SA103 forms) are still accepted but must be submitted earlier—by 31 October following the end of the tax year. The same principles apply: enter your mileage allowance under the motor expenses section.

Paper forms do not provide automatic calculations, so you will need to manually work out your taxable profit and tax due.

Recordkeeping and Evidence

HMRC does not require you to submit mileage logs or receipts when filing your tax return. However, you must keep these records for at least five years after the submission deadline in case HMRC asks to review your claims.

For mileage allowance, keep a detailed log of journeys showing:

• Date of travel
• Start and end locations
• Business purpose
• Distance travelled
• Vehicle used
• Names of any business passengers (if claiming extra mileage)

Supporting documentation could include:

• Appointment confirmations
• Invoices related to site visits
• Calendar entries showing meetings or deliveries

Proper recordkeeping is essential in the event of an audit or query. Well-maintained logs strengthen your case and demonstrate that your claims were accurate and honest.

Avoiding Common Mistakes

When claiming mileage on your Self Assessment, certain errors can lead to incorrect filings or rejected claims. Be mindful of the following common issues:

1. Claiming for Personal Journeys

You must not include mileage for personal travel, including commuting from home to your regular place of business. Only journeys that are wholly and exclusively for business are allowable.

2. Double-Claiming Expenses

If you claim the mileage allowance, you cannot also claim fuel, repairs, or insurance for the same vehicle. All those costs are already accounted for in the flat rate.

3. Using the Wrong Mileage Rates

Ensure that you apply the correct rates depending on the vehicle type and mileage threshold. For example, 45p per mile applies only to the first 10,000 business miles in a car or van.

4. Missing Passenger Mileage

If you transport an employee or assistant who works for your business, you can claim an extra 5p per mile. This is often overlooked and could result in missed claims.

5. Not Keeping Supporting Documents

Even if you file correctly, failing to keep adequate records could cause problems if HMRC reviews your return. Ensure all logs and receipts are safely stored and accessible.

What to Do if HMRC Questions Your Mileage Claim

HMRC may review your tax return if it identifies inconsistencies or if your mileage claim appears unusually high. In such cases, you may be asked to provide evidence to support your claim.

To respond effectively:

• Provide a copy of your mileage log covering the relevant tax year
• Include supporting documentation like job sheets, delivery schedules, or meeting confirmations
• Offer context where necessary (e.g., high mileage due to frequent site visits or regional client coverage)

If you are found to have claimed incorrectly but not fraudulently, HMRC may adjust your return and issue a correction. However, if they determine that you knowingly inflated your claims, you may face penalties or a full investigation. Being transparent, cooperative, and well-organised can help resolve queries quickly and reduce stress.

Updating Your Approach in Future Tax Years

Filing your return and claiming mileage is not just an annual task—it should also be a learning process. After completing your tax return:

• Review any issues that arose
• Identify which parts of the process were time-consuming
• Make changes to how you track mileage or store receipts
• Consider adopting digital tools if manual processes felt inefficient

Keeping your records up to date throughout the year makes next year’s return much easier to prepare.

Staying Compliant With HMRC

Compliance with HMRC’s guidance is essential for all self-employed individuals. The rules around mileage are clear: only business journeys count, and you must choose between the simplified mileage allowance and actual cost methods.

Understanding your responsibilities and fulfilling them accurately helps maintain the integrity of your business finances and avoids potential fines or audits. Regularly reviewing HMRC’s guidance on allowable expenses ensures you stay up to date with any changes in tax rules or mileage rates.

Reporting Process

Reporting mileage allowance on your Self Assessment tax return involves:

• Accurately tracking your business mileage throughout the year
• Calculating your total mileage claim using the correct rates
• Including the total under the motor expenses section in SA103
• Retaining logs and evidence in case of an HMRC query
• Avoiding errors such as double-claiming or using incorrect rates

A well-prepared tax return not only helps reduce your tax bill but also keeps your business on the right side of tax law. In the long run, efficient reporting saves time, provides peace of mind, and ensures you gain the full benefit of the mileage allowance available to you as a sole trader.

Conclusion

Understanding and correctly applying mileage allowance is a key part of managing expenses as a sole trader. Whether you drive extensively for client visits, transport equipment, or carry out on-site jobs, the costs associated with business travel can quickly add up. Thankfully, HMRC provides a clear and simplified way to recover some of these expenses through the mileage allowance scheme.

Throughout this series, we have explored the essential elements of mileage allowance—from the rules and eligibility criteria to the calculation methods and how to report your claims on a Self Assessment tax return. By choosing between the simplified mileage allowance or the actual cost method, sole traders have the flexibility to adopt the system that best suits their recordkeeping preferences and business model.

Tracking mileage accurately and consistently is critical. Maintaining a clear, detailed log of each business journey, along with the supporting documentation, ensures that your tax return is accurate, compliant, and less likely to be challenged by HMRC. Leveraging modern tools like mileage-tracking apps and cloud-based accounting software can significantly streamline this process and improve data accuracy.

The Self Assessment process requires careful attention to detail. Reporting your mileage claim in the correct section, using the right rate, and avoiding double claims are all vital steps. Failure to comply can lead to errors, missed deductions, or even penalties. But with a methodical approach and good recordkeeping habits, sole traders can confidently claim what they are entitled to and minimise their tax burden.

Ultimately, taking the time to understand how mileage allowance works—and integrating it into your broader expense strategy—can deliver meaningful savings while helping you stay on the right side of tax law. Treat your mileage records like any other part of your business finances: keep them organised, updated, and ready to support your claims. This not only ensures smoother annual reporting but also empowers you to operate your self-employed business more efficiently and with greater financial awareness.