Understand 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.
What is the Self Employed Mileage Allowance?
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.
The Standard HMRC Sole Trader Mileage Allowance for 2022/2023
The sole trader mileage allowance is a flat rate per mile, according to the type of vehicle used, under what is known as simplified expenses, to make it easy to claim for business costs, with minimal information. The current self-employed mileage allowance rates 2022/2023 tax year:
- 45 pence per mile for cars and goods vehicles on the first 10,000 miles travelled (25 pence over 10,000 miles)
- 24 pence per mile for motorcycles
- 4p per mile for fully electric cars
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.
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 of calculating mileage for self-assessment:
You drive 11,000 business miles in the tax year 2021 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 personally 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”
What is 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.
So watch out, if you are a freelancer and have a fixed arrangement with a client at their premises, you may not be able to claim the mileage.
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”. HMRC defines ordinary commuting as being journeys between an employee’s home and their permanent workplace. Your permanent workplace is the place you attend regularly. That may even be your own house if you work from home. A regular journey is one that you have to do in order to get to work. That means if you choose to rent an office, you would not be able to claim any type of travel cost getting to it or home again.
Examples of Business Trips Eligible for the Mileage Allowance
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.
What Other Car Expenses are Tax Deductible?
The self-employed mileage allowance covers the cost of wear and tear on your vehicle as well as fuel, MOT and servicing. That means other car expenses are not tax deductible like MOT, repairs and fuel. The HMRC Mileage Allowance rate per mile is set to include a contribution to these costs.
What Records Do You Need to Keep
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
The easiest way to claim business mileage is to use a mileage claim form. Take a look at my business mileage spreadsheet template here.
Always remember to keep as detailed a record as possible for each of your journeys just in case HMRC ask to look at your records.
Claiming Self-Employed Mileage Expenses On Your Self Assessment Tax Return
You’ll need to claim the cost of tax-deductible business mileage in the self-employment section of your self assessment tax return. If your business turnover is less than £85,000 for 2022-23, 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’ll need to include your business mileage claim in the figure you enter alongside your other allowable business expenses.
If your business turnover is more than £85,000 you’ll need to enter a breakdown of your expenses in the boxes set out by HMRC and you’ll need to 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 this instance, they ask for evidence of what you are claiming for to check you’ve paid the right amount of self-employed tax.
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