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26 February, 2021 - 5 min read

Self employed mileage allowance

UPDATED NOV 5, 2021 • 6 MIN READ

This part of our guide will walk you through the rules on self employed mileage allowance in the UK. Here you will find answers to the following questions:

  • How can I claim business mileage if I am self-employed?
  • What can I claim if I use my vehicle for both business and private purposes?
  • What is the best way for me to claim my business mileage?
  • What records do I need to keep?
  • What are the need-to-know tax rules for vehicle expenses?

As self-employed, you are able to deduct some of your business expenses from your profit before tax. The expenses you can claim are called allowable business expenses, and your vehicle business expenses are covered by this scheme.

Before we get into how you can claim business mileage and other expenses for your work vehicle, there are some general rules you should be aware of. 

 

If you use a Trading Allowance:

If you make use of the tax-free Trading Allowance, you will not be able to claim any allowable business expenses, including vehicle costs. If you want to know more about why you cannot claim other allowable costs, you can read HMRC’s article on Trading Allowance.

If you have a limited company:

If you run your own limited company and use your private vehicle for work, you will be able to pay yourself Mileage Allowance Payments (MAPs) from your company and claim other business travel costs as allowable business expenses (e.g. parking fees, train fares, accommodation).

If your limited company owns the vehicle, you will only be able to claim Advisory Fuel Rates (AFR) set by HMRC and the company will take on the expenses of vehicle maintenance and other travel expenses.

If you also drive your vehicle for private purposes:

If you use your vehicle for both private and business purposes, you will only be able to claim expenses for your business mileage. To accurately manage this, you will need to regularly record your total mileage - both for private and business trips. You will also need to keep in mind HMRC’s rules on what passes as business travel.

What is classed as business mileage?

Anything defined by HMRC as a business trip is considered business mileage. Self employed mileage allowance should be available for any business mileage you drive as self-employed. Take for example any of the following:

  • Travel between your permanent workplace and your temporary work (e.g. visiting clients or suppliers)
  • Travelling between temporary workplaces
  • Travel between two workplaces in the same employment
  • Travelling from home to another workplace if “home” is your permanent workplace due to the requirements of the job.

One key thing to note - if you work from an office and not from your home, you can’t count commuting to and from work (your permanent workplace) as a business trip.

How do I claim self employed business mileage?

If you are self employed, you have two options for how you can record and claim mileage and other vehicle expenses for your business: using actual vehicle costs or simplified expenses (mileage rate).

You should carefully consider which one you want to use. Using actual vehicle costs is more time consuming but gives you the most accurate reading of your actual vehicle expenses. Using a mileage rate is a simpler solution, but may not properly reflect your actual vehicle costs. On top of that, if you use a mileage tracking app for this, it may not be as time consuming since your trips will be tracked automatically and you can quickly generate HMRC compliant reports.

 

If you are unsure of which method will suit you best, try out HMRC’s simplified expense checker. This tool will help you find the best solution for yourself and your business.

How do I calculate my actual vehicle costs?

One method of claiming mileage and other vehicle-related expenses if you’re self employed is to record all costs incurred from using your vehicle for business-related driving. At the end of the tax year, you will be able to deduct the costs from your company’s taxable profit.

This way of claiming vehicle costs might be better for you if your vehicle expenses are high due to high road tax, insurance, fuel consumption, etc. However, it is a more time-consuming way of recording your vehicle expenses.

The vehicle costs you can deduct include:

  • Fuel
  • Vehicle insurance
  • Repairs and maintenance
  • Servicing
  • Breakdown cover
  • Parking
  • License fees

There are other allowable travel expenses you can claim besides your vehicle costs. These are accommodation and meal prices for business trips, journeys with other vehicles (e.g. train or airfares) and car hire charges. If you are not sure what records you need to keep as self employed, jump over to our article on  self-employed mileage allowance records

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What about simplified vehicle expenses?

The aptly-named simplified expenses method is great if you want to save time by not having to log every single vehicle expense. Instead, you calculate your vehicle expenses using a flat rate set by HMRC. The flat rate is meant to cover all vehicle costs, just like the standard mileage allowance; that would be fuel, servicing and repairs, maintenance, depreciation, and insurance and road tax.

Keep in mind you can’t use simplified expenses if you have claimed capital allowance for your vehicle or have included it in your business expenses.

Also, if you use the simplified expenses method for your vehicle, you can’t switch to actual vehicle costs as long as you still use that same vehicle for work. You can, however, switch from actual vehicle costs to simplified expenses.

You can see the approved mileage rates from HMRC in our article on current mileage rates.

Other allowable expenses you can claim on top of the simplified expenses method are parking fees, journeys with other vehicles (e.g. train tickets), car hire charges, accommodation and meal prices for work-related trips.

Feel free to contact us with any questions you may have about self employed mileage allowance in the UK.

FAQ about mileage allowance and claim for self-employed 

1. Can a self-employed person claim mileage allowance?

Yes! If you're self-employed, you can claim a mileage allowance of 45p per business mile for the first 10,000 miles and 25p per business mile after that. 

2. What does the 45p mileage allowance cover for the self-employed? 

The 45p mileage allowance aims to cover all the costs you incur in your business driving such as fuel costs and maintenance, insurance and road tax. The allowance only aims to cover driving which you did for business purposes, all personal driving expenses should not be included in what the allowance covers for the self-employed.

3. How do I prove my mileage for taxes as a self-employed in the UK?

The best way to prove you drove the miles you claim in your taxes is to use a logbook where you log your driving. That can be easily done by using the Driversnote app to track and log your trips, by using an Excel sheet, a Google Spreadsheet, a PDF or a physical logbook. 

How to automate your mileage logbook

Manually filling out your logbook can get tedious - see how to automatically track trips for your mileage reimbursement or deductions.

This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied upon for, legal, tax or accounting advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal, tax or accounting advisor.
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