The mileage allowance for the self-employed has been stuck at 45p per mile since 2011. From 6 April 2026, that changed: the rate for cars and vans climbed to 55p per mile for the first 10,000 business miles in a tax year, backdated to the start of 2026/27. It is the first increase in a decade and a half, and it is worth understanding properly before you complete your next Self Assessment return.

For most sole traders who drive regularly for work, this is a straightforward and welcome improvement. The mechanics of claiming are not especially complicated, but the rules around which method you use, and whether you can switch, are stricter than many people realise. This post covers the current rates, how simplified mileage expenses work in practice, when the actual costs method might be worth considering instead, and what records you need to keep.

As of 6 April 2026, the approved mileage rates for self-employed people using their own vehicles are:

• Cars and vans: 55p per mile for the first 10,000 business miles, then 25p per mile thereafter
• Motorcycles: 24p per mile, unchanged from previous years
• Bicycles: 20p per mile, also unchanged

The 55p rate for cars and vans replaced the previous 45p rate that had applied since 2011. The government announced the increase on 21 May 2026 in response to elevated fuel costs, and applied it retrospectively from the start of the 2026/27 tax year.

To put that in practical terms: if you drive 11,000 business miles in 2026/27, your claim would be 10,000 miles at 55p (£5,500) plus 1,000 miles at 25p (£250), giving a total deduction of £5,750. Under the old 45p rate, the same journey would have produced £4,750. That is a meaningful difference for anyone with a reasonable amount of business travel.

One thing worth noting: the Association of Taxation Technicians has pointed out that if the rate had kept pace with inflation since 2011, it would now stand at around 68p per mile. The 55p rate is a step in the right direction, and the government has committed to a review of rates at the next Budget, but it does not fully close the gap that built up over 15 years.

The simplified mileage rate is available to sole traders and business partnerships that do not include a limited company as a partner. It is not available to limited companies, which use a different system entirely.

The method is straightforward: you record every business journey you make (the date, destination, purpose, and miles driven), then multiply your total business miles by the relevant rate at the end of the year. The resulting figure goes into the expenses section of your Self Assessment return as your vehicle cost. You do not need to keep fuel receipts, track insurance costs, or apportion servicing bills.

That simplicity is the main appeal. For most sole traders, particularly those who mix personal and business use of the same car, the flat rate removes a significant amount of record-keeping. You simply need a reliable mileage log.

There is one important restriction: once you have used the simplified mileage method for a particular vehicle, you must continue using it for that vehicle for as long as you use it in the business. You cannot switch to the actual costs method mid-way through. The reverse also applies: if you have already claimed capital allowances on a vehicle, or included it in your actual expenses calculation, you cannot then switch to the flat rate. The choice is effectively permanent for that vehicle, so it is worth thinking through at the outset.

You can also claim parking costs and other travel expenses (train fares, for example) on top of your mileage claim. The flat rate covers fuel, servicing, insurance, and depreciation, but not parking or public transport used for separate business journeys.

The simplified mileage rate suits most sole traders well, but there are situations where calculating your actual vehicle costs produces a larger deduction.

Actual costs means working out the total expenses of running your vehicle (fuel, insurance, road tax, servicing, MOT, finance interest if applicable, and capital allowances for the vehicle itself), then applying the percentage of use that was genuinely for business. So if your car costs £6,000 a year to run and 60% of your mileage is business, you can claim £3,600.

The flat rate tends to win for people driving a modest, economical car with a reasonable volume of business miles. If your car is expensive to run, either because it is large, old, or high-mileage on fuel, actual costs can sometimes produce a higher figure. The same is true if a very high proportion of your driving is business use.

HMRC offers a simplified expenses checker on GOV.UK that lets you compare both approaches before you commit. We would recommend running the numbers for at least your first full year of business before making the decision, particularly if you have recently bought a new vehicle. If you use the actual costs method from day one, you may be able to claim capital allowances on the purchase price, which can be significant in the first year.

For most of our clients who are sole traders with mixed-use vehicles and moderate mileage, the flat rate is the simpler and often the better choice. But it is worth checking rather than assuming.

Whichever method you use, your mileage records need to be good enough to stand up to scrutiny if HMRC queries your return. That means keeping a contemporaneous log, not something reconstructed at the end of the year from memory.

A good mileage log records the date of each journey, where you started and ended, the purpose of the trip, and the number of miles. Apps such as MileIQ or similar mileage trackers can automate most of this if you prefer not to maintain a manual log. The format does not matter to HMRC, but the detail does.

Commuting is not a deductible business expense. Travel from your home to a fixed regular workplace does not qualify, even if your workplace is a client’s premises you visit every week. Where it gets more nuanced is for tradespeople, consultants, or delivery drivers who genuinely travel to different locations on different days. In those cases, the journeys are typically business travel and can be claimed.

If your business involves visiting multiple sites or clients in a single day, each leg of the journey counts separately. Keep notes on each stop so the log is clear and coherent if it is ever reviewed.