Mileage allowance for sole traders: the 45p/25p rule and how to claim it
If you use your own car for business journeys, you may be able to claim mileage using HMRC approved mileage rates. For cars and vans, the familiar rule is 45p per mile for the first 10,000 business miles and 25p per mile after that.
What the 45p/25p rule means
The approved mileage allowance payment rate for cars and vans is 45p per mile for the first 10,000 business miles in the tax year, then 25p per mile above that. The rate is designed to cover running costs like fuel, servicing, insurance, repairs, and depreciation.
You can estimate the claim quickly with the mileage claim calculator.
What counts as business mileage
Business mileage normally means journeys made wholly and exclusively for business, such as travelling to a client, supplier, temporary workplace, training event, or job site. Private journeys do not count, and ordinary commuting to a regular workplace is usually excluded.
Keep a mileage log
A good mileage log records the date, start point, destination, business reason, and miles. You do not need a complicated app, but you do need evidence that the journeys happened and were business-related. Calendar entries, invoices, and location records can help support the log.
Actual costs vs flat rate mileage
Many sole traders use simplified mileage because it is easy to apply and avoids splitting every fuel, insurance, servicing, and repair bill between business and private use. The alternative is claiming actual business motoring costs, apportioned for business use. Once you choose a method for a vehicle, be consistent and check HMRC rules before switching.
Electric vehicles
Electric cars can still use mileage rates where the simplified mileage method applies. The rate is not just a fuel rate; it is intended to cover broader running costs. If you charge at home, keep records that support the business journeys rather than trying to treat every charging cost as automatically deductible.
Passengers and other vehicles
HMRC has different rates for motorcycles and bicycles, and there can be an additional passenger rate in some employment contexts. For a sole trader claim, focus first on the business journey evidence and the vehicle category you actually used.
Worked example
Suppose you drive 12,000 business miles in your car during the tax year. The first 10,000 miles are claimed at 45p, giving £4,500. The remaining 2,000 miles are claimed at 25p, giving £500. The total mileage claim is £5,000.
Common mistakes
- Claiming all car mileage instead of business mileage only.
- Forgetting to keep journey-level records.
- Claiming commuting to a regular workplace.
- Mixing actual costs and simplified mileage without checking consistency rules.
- Assuming mileage is extra income rather than an expense deduction.
Official source
Check the current rates on GOV.UK: Travel mileage and fuel rates and allowances.