Learn how the self-employed mileage allowance works, find out how much you can claim per mile in accordance with HMRC rules and the records you need to keep to claim it on your tax return.
Friendly Disclaimer: Whilst I am an accountant, I’m not your accountant. The information in this article is legally correct but it is for guidance and information purposes only. Everyone’s situation is different and unique so you’ll need to use your own best judgement when applying the advice that I give to your situation. If you are unsure or have a question be sure to contact a qualified professional because mistakes can result in penalties.
How to Claim Mileage if You’re Self-Employed
If you use your personal vehicle for business reasons you are entitled to claim back a set amount per mile that you drive to cover the costs of travel. HMRC sets out fixed rates per mile that you can use to claim travel, under what is known as simplified expenses.
The self-employed mileage allowance is the amount set by HMRC that you can claim for using your personal vehicle for business reasons as an allowable business expense on your tax return.
How Much is the Self-Employed Mileage Allowance?
The mileage rates set by HMRC are set at a rate per mile that contributes to the cost of wear and tear on a vehicle as well as fuel, MOT and servicing. Other car expenses are not tax deductibles such as MOT, repairs and fuel. So depending on your circumstances, it may be more cost-effective to buy a car through your business instead.
- 45 pence per mile for cars, electric cars and goods vehicles on the first 10,000 miles travelled (25 pence over 10,000 miles)
- 24 pence per mile for motorcycles
- 20 pence per mile for bicycles
*the tax year runs from 6 April to 5 April each year
The mileage allowance rates have remained the same since 6 April 2011 despite several petitions having been put forward to increase the mileage rate to 60p per mile to reflect the increase in fuel and vehicle maintenance costs. So far, they have been rejected.
How to Calculate the Self-Employed Mileage Allowance for Self Assessment
To work out the amount of business mileage you can deduct against your taxes you’ll need to:
- Add up the number of business miles you have travelled;
- Multiply the number of miles in Step 1 by the HMRC mileage allowance rate per mile.
Here’s an example:
You drive 11,000 business miles in the tax year 2023-24 using your own car. The total amount of mileage you can claim against your taxes is calculated as follows:
- £4,500 on the first 10,000 miles (10,000 x 45p)
- £250 on the remaining 1,000 miles (1,000 x 25p)
- Total £4,750
When you fill in your tax return, you can claim for mileage of £4,750 as an allowable expense. You can also claim £4,750 from your business bank account as a tax-free refund for what you have spent from your personal bank account for fuelling and maintaining your vehicle.
What Counts as Business Mileage for Self-Assessment?
You can claim business mileage against your taxes for journeys that are necessary for work reasons. That’s times like when you see a client or supplier and if you work from a “temporary workplace“.
A temporary workplace is defined by HMRC as one which you attend that:
- Is for a limited time only, like a one-off meeting;
- Meets the “40% rule” – that means a workplace where you spend less than 40% of your working time;
- Is for less than 24 months.
Can I Claim Mileage to and From Work if I am Self-Employed?
When you are self-employed, you cannot claim mileage for commuting to work, unfortunately. This is what HMRC classifies as “Ordinary Commuting”.
An “ordinary commute” is defined by HMRC as being journeys between a sole trader or employee’s home and their permanent workplace. A permanent workplace is a place you attend regularly – that may even be your own house if you work from home or an office space that you decide to rent to run your business.
Here are some examples:
Example 1
You work from home as a self-employed bookkeeper and go to visit a potential new client. You can claim the mileage from your home to the client as a travel expense against your taxes.
Example 2
You are a self-employed hairdresser and decide to rent a chair at a salon. You cannot claim the mileage allowance for travel between your home and the salon because this would be an ordinary commute to your permanent workplace. However, you’ll be able to claim the self-employed mileage allowance for any one-off journeys outside of your regular commute for example to buy supplies.
Example 3
You are a self-employed gardener and store your tools at a local garage. You cannot claim mileage for travelling between your home and garage because this is considered part of your ordinary commute.
Tracking Business Mileage
Any business mileage claims must be supported by a record of each business trip and the mileage rate claimed including:
- Date
- Location
- Miles travelled
- Reason for the trip
Depending on your preference you can track your business miles by using either a spreadsheet or a mileage tracker app.
If you are looking for an automated solution to your mileage and bookkeeping, then take a look at Xero where you can set up expense and mileage claims on their app. Learn more about the Xero free trial here.
How to Claim Self-Employed Mileage Expenses On Your Self-Assessment Tax Return
You claim your business mileage in the self-employment section of your self-assessment tax return.
If your business turnover is less than £85,000 for 2023-24, you’ll have the option to fill in the simplified version of this part of the tax return so only need to enter your total expenses. You must include your business mileage in the figure you enter alongside your other allowable business expenses.
If your business turnover is more than £85,000 you must enter a breakdown of your expenses in the boxes set out by HMRC and include your business mileage in car, van and travel expenses.
Whatever your business turnover you should keep a note of what you are claiming for and how you worked it out as part of your business records in case of an HMRC investigation. In case they ask for evidence of what you are claiming to check you’ve paid the right amount of self-employed tax.
