Fuel prices fluctuate. Electric charging costs rise. Business travel never stops.
Yet many UK workers and sole traders still underclaim — or worse, claim incorrectly — when it comes to mileage allowance expenses.
In 2026, the rates haven’t dramatically changed. The scrutiny has.
With expanded Making Tax Digital (MTD) requirements and smarter compliance systems from HM Revenue & Customs, accurate mileage claims are no longer optional bookkeeping — they’re a compliance necessity.
This guide covers official 2026 HMRC mileage rates, who can claim and who can’t, the overlooked 5p passenger payment, EV vs petrol rules clarified, VAT on mileage, audit-proof record keeping, real-world warning signs, and a clear quick-check summary for instant clarity.
What Are Mileage Allowance Expenses?
Mileage allowance expenses are tax-deductible amounts you can claim when using your personal vehicle for business purposes. Instead of claiming fuel, insurance, servicing, and depreciation separately, HMRC allows a flat rate per mile under Approved Mileage Allowance Payments (AMAP).
As confirmed in the GOV.UK official HMRC mileage rates and allowances publication, these rates are the maximum amounts employers can pay tax-free and the benchmark for self-employed claims — and they have remained unchanged since 2011.
2026 HMRC Mileage Rates
| Vehicle Type | First 10,000 Miles | Over 10,000 Miles |
|---|---|---|
| Cars & Vans | 45p per mile | 25p per mile |
| Motorcycles | 24p per mile | 24p per mile |
| Bicycles | 20p per mile | 20p per mile |
The 45p rate covers fuel or electricity, insurance, vehicle tax, repairs and servicing, depreciation, and general wear and tear. You cannot claim these separately if using the mileage rate.
Who Can Claim Mileage Allowance Expenses?
You may claim if you are a sole trader using your personal car for business, an employee using your own vehicle for work travel, a director of a limited company, a landlord visiting rental properties, or a furnished holiday letting operator.
You cannot claim for ordinary commuting (home to permanent workplace), personal trips, or travel already reimbursed at the full HMRC rate.
Understanding how much of your total income falls within each tax band puts the real value of mileage claims in context — a higher-rate taxpayer saves 40p in tax for every £1 of legitimate mileage deducted, compared to 20p for a basic-rate taxpayer.
Commuting vs Business Travel (The Critical Difference)
This is where most claims go wrong.
| Journey | Allowable? | Why |
|---|---|---|
| Home → Permanent Office | ❌ No | Ordinary commuting |
| Home → Client Site | ✅ Yes | Temporary workplace |
| Office → Client | ✅ Yes | Business journey |
| Client A → Client B | ✅ Yes | Business travel |
| Home → Temporary Site | ✅ Usually | Depends on permanence |
The key phrase is “Permanent Workplace.” If you attend somewhere regularly and predictably, HMRC may treat it as permanent — even if you don’t. The GOV.UK guidance on business travel mileage for employees’ own vehicles confirms that the approved amount is calculated by multiplying business travel miles by the rate per mile — commuting miles must never be included in that figure.
The 5p Passenger Payment (Often Missed)
Here’s a small but legitimate boost many people forget. You can claim an extra 5p per mile per passenger if they are a fellow employee or business partner travelling for business purposes.
Example: 60-mile round trip with one qualifying passenger: 60 × 5p = £3 additional claim. Over a year, this adds up meaningfully — particularly for tradespeople or consultants who regularly travel to sites with colleagues.
Real-World Warning: How HMRC Checks Mileage
Mileage claims that look “too tidy” attract attention. HMRC can cross-check your claimed mileage against MOT history mileage records, employer reimbursement submissions, and prior-year patterns.
If your MOT shows 11,000 total miles for the year and you claim 10,500 business miles, that raises questions. Other red flags include perfectly round figures (e.g., 8,000 miles exactly), no log evidence, and claiming fuel separately alongside mileage.
The solution is contemporaneous records — logs created at the time of travel are far stronger than reconstructed spreadsheets. If HMRC does open an enquiry, having clean digital mileage records is the difference between a swift resolution and a protracted compliance check. Those who have previously experienced issues with an incorrect tax code or unexpected underpayments know how quickly HMRC’s cross-referencing can surface discrepancies — mileage logs are no different.
EV vs Petrol: What Applies in 2026?
There’s major confusion here — let’s simplify it.
Personal Electric Vehicle (Used for Business)
You claim 45p per mile for the first 10,000 miles, 25p per mile thereafter. The AMAP rate applies regardless of where you charge. It doesn’t matter whether you charge at home or at a public point — the rate covers electricity costs within the flat allowance.
Company Electric Vehicle
Different rules apply entirely. Instead of 45p, you use the Advisory Electric Rate (AER) published quarterly by HMRC. As confirmed on the GOV.UK Advisory Fuel Rates page, from 1 March 2026 the rates are 7p per mile for home charging and 15p per mile for public charging. This covers electricity costs only — not full vehicle running costs — and proof of charging location must be provided to claim the higher public rate.
This home/public split is a significant 2026 development that catches many company car drivers out. If your employer only reimburses the 7p home rate while you predominantly charge publicly, you may be materially out of pocket unless you document your charging location accurately.
VAT on Mileage (Advanced but High-Value)
If you’re VAT-registered and using mileage allowance, you may reclaim the VAT element of the fuel portion of the mileage rate. You cannot reclaim VAT on the full 45p — only the fuel component qualifies — and you must keep valid VAT fuel receipts.
To calculate reclaimable VAT: use HMRC advisory fuel rates, determine the fuel element per mile, then extract the VAT portion. Many VAT-registered sole traders miss this entirely. Handled correctly, it increases legitimate tax recovery without any additional business cost.
How to Calculate Mileage Allowance Expenses
Example: Sole Trader
James drives 9,000 business miles in 2026.
9,000 × 45p = £4,050 deductible expense.
If he’s a basic-rate taxpayer at 20%: £4,050 × 20% = £810 tax saved.
Now add one business passenger on half those trips: 4,500 × 5p = £225 extra deduction.
Total potential savings increase further. An after-tax calculator can help sole traders model exactly how mileage deductions reduce their final tax bill based on their actual income level.
Small increments matter.
2026 Mileage Quick-Check Summary
- Personal Car (Business Use): 45p per mile for first 10,000 miles; 25p per mile thereafter
- Motorcycles: 24p per mile
- Bicycles: 20p per mile
- Passenger Add-On: +5p per business passenger
- Company EV: 7p per mile (home charging) / 15p per mile (public charging) from March 2026
- Records Required: Date, start and end postcodes, purpose, total miles
- MTD Impact (April 2026): Digital record-keeping required for qualifying taxpayers earning over £50,000
How to Audit-Proof Your Mileage Log
With Making Tax Digital expanding, digital evidence matters more than ever.
- 1. Record journeys at the time — not months later.
- 2. Avoid round-number estimates — real travel produces irregular totals.
- 3. Keep supporting proof — calendar invites, client emails, job sheets that corroborate each journey’s business purpose.
- 4. Use GPS-based tracking apps — tools like MileIQ or accounting-integrated mileage trackers create time-stamped, location-verified records that are difficult for HMRC to challenge.
5. Reconcile annually — check your claimed mileage aligns logically with total annual vehicle mileage, including MOT records.
Those already filing through HMRC’s self-assessment system should ensure mileage figures entered on their return match their digital log precisely — discrepancies between software totals and submitted figures are one of the easiest compliance checks for HMRC to run under MTD’s expanded data access. The goal isn’t perfection. It’s defensibility.
Common Mileage Claim Mistakes
The most frequent errors are claiming commuting as business travel, failing to account for the 10,000-mile threshold change from 45p to 25p, double-claiming fuel costs alongside the mileage rate, ignoring the passenger rate, missing the VAT recovery opportunity, and maintaining no digital records under MTD.
All of these are preventable — and all of them have appeared in HMRC compliance checks in recent years. If you’ve received a P800 tax calculation showing an unexpected underpayment, a mileage error on your return is one of the first things worth reviewing.
Mileage Allowance vs Actual Cost Method
| Method | Best For | Pros | Cons |
|---|---|---|---|
| Mileage Allowance | Most sole traders | Simple, low admin | Cannot claim separate costs |
| Actual Costs | High-expense vehicles | May increase claim | Heavy record keeping |
Most small businesses prefer mileage allowance due to simplicity and reduced compliance risk. Once you choose the mileage method for a specific vehicle, you must continue using it for that vehicle’s lifetime in your business — you cannot switch back to actual costs.
2026 Compliance Context
As of April 2026, Making Tax Digital applies to qualifying taxpayers, digital record-keeping is mandatory above income thresholds, and HMRC compliance tools are increasingly data-driven. Understanding the current UK tax brackets alongside your mileage relief is essential for accurately projecting your tax liability — particularly if you’re close to the higher-rate threshold, where an unclaimed mileage allowance has double the tax value it would at the basic rate.
Mileage rates remain stable. Enforcement has evolved.
FAQs
Q. Is the mileage allowance still 45p in 2026?
Yes. As confirmed in HMRC’s official mileage rates publication, the approved rate remains 45p per mile for the first 10,000 business miles and 25p thereafter for cars and vans — unchanged since 2011.
Q. Are mileage payments an allowable expense?
Yes. For sole traders, mileage allowance reduces taxable profit directly. Employees can claim Mileage Allowance Relief if reimbursed below the HMRC-approved rate. Knowing how much you can earn before tax becomes due helps you understand why reducing taxable profit through mileage claims has a direct, measurable impact on your bill.
Q. Can a sole trader claim mileage allowance?
Yes, using simplified expenses rules for business journeys. Sole traders enter total business mileage on their self-assessment return and the deduction reduces taxable profit accordingly.
Q. Can I claim 5p per passenger?
Yes, if the passenger is a fellow employee or business partner travelling for business. The passenger rate applies per person per mile — so two qualifying passengers travelling together means an additional 10p per mile for the driver.
Q. Can I claim mileage for an electric car?
Yes, if it’s your personal vehicle, the standard 45p/25p AMAP rate applies regardless of fuel type. Company EVs use the Advisory Electric Rate instead, which, as of March 2026, is 7p per mile for home charging and 15p per mile for public charging, as published on GOV.UK’s advisory fuel rates page.
Q. Can I reclaim VAT on mileage?
VAT-registered traders can reclaim VAT on the fuel portion of mileage rates if proper fuel receipts are kept. You cannot reclaim VAT on the full 45p — only the advisory fuel component qualifies. This is one of the most commonly missed reliefs among VAT-registered sole traders and small businesses.
Conclusion
Mileage allowance expenses remain one of the simplest and most effective tax reliefs available in the UK.
In 2026, the essentials are clear: 45p per mile still applies for personal vehicles, passenger payments add genuine value, EV rules now depend on both ownership type and charging location, VAT recovery is possible for registered traders, and record-keeping is more important than ever under MTD.
Claim accurately. Keep clean logs. Understand the thresholds.
Use the new tax year as a trigger to review your mileage records, confirm your vehicle is on the right rate, and check whether your income now brings you within MTD’s mandatory digital reporting scope. Small miles, properly documented, reduce real tax.
UK tax law changes fast. Pure Magazine keeps pace — so your financial decisions are always based on what’s current, not what was true two years ago.
