Mileage Made Simple: What You Can Actually Claim
- josie139
- Sep 29
- 3 min read
As a business owner, every mile you drive for work could be putting money back in your pocket – but only if you're claiming it correctly. Mileage allowances are one of the most overlooked tax reliefs available, yet they're also one of the most misunderstood. Let's cut through the confusion and show you exactly what you can claim, how much you can claim, and why keeping proper records isn't just recommended – it's essential.
Understanding the HMRC Mileage Rates
HMRC sets specific rates for business mileage that haven't changed in years, making them easy to remember:
Cars and Vans:
45p per mile for the first 10,000 business miles in the tax year
25p per mile for every mile over 10,000
Motorcycles: 24p per mile Bicycles: 20p per mile
These rates are designed to cover not just fuel, but also wear and tear, insurance, road tax, and other running costs. It's an allowance that aims to recognise the true cost of using your personal vehicle for business.
The Critical Difference: Business Miles vs Commuting
Here's where many business owners trip up – not every journey qualifies as a business mile. Understanding this distinction could save you from an uncomfortable conversation with HMRC.
What Counts as Business Mileage:
Travelling to meet clients or suppliers
Visiting different work locations (if you don't have a fixed workplace)
Attending business meetings, conferences, or training
Collecting business supplies or equipment
Any journey that's wholly and exclusively for business purposes
What Doesn't Count (Commuting):
Your regular journey from home to your permanent workplace
Travelling from your main workplace to home
Personal journeys, even if you discuss business during them
Detours for personal reasons during business trips
The key test: Would you have made this journey if you weren't running your business? If the answer is no, it's likely a claimable business mile.
Why Proper Mileage Logs Are Non-Negotiable
HMRC can ask to see your mileage records up to six years after you've submitted your tax return. Without proper documentation, you could face having to repay claimed allowances plus interest and penalties.
Your mileage log should record:
Date of journey
Start and end locations
Purpose of the trip
Miles travelled
Pro Tips for Better Record Keeping:
Use a smartphone app to track mileage automatically
Take photos of your odometer at the start and end of business trips
Keep a simple notebook in your car for quick logging
Record business mileage immediately – don't rely on memory
Save supporting documents like meeting invites or client correspondence
Common Mileage Mistakes That Cost Money
Mistake 1: Not claiming because "it's only a few miles" Those short trips to suppliers or client meetings add up quickly. Even a 5-mile round trip three times a week equals £351 in annual mileage allowance.
Mistake 2: Claiming commuting as business mileage This is the fastest way to trigger an HMRC investigation. Be honest about what constitutes your normal commute.
Mistake 3: Poor record keeping "I think I drove about..." won't cut it with HMRC. Estimates aren't acceptable – you need actual records.
Mistake 4: Not understanding the 10,000-mile threshold Many business owners don't realise the rate drops to 25p after 10,000 miles. Plan your claiming strategy accordingly.
Making Mileage Work for Your Business
If you're employed by your own company, you have two options:
Claim mileage allowance: Your company pays you up to the HMRC rates tax-free
Tax relief on expenses: Claim the difference between what your employer pays and the HMRC rates
For sole traders and partnerships, mileage allowance reduces your taxable profit directly.
Mileage allowances represent real money – often hundreds or thousands of pounds annually for active business owners. But this tax relief only works if you play by the rules: keep detailed records, understand what qualifies as business mileage, and be honest about the distinction between business travel and commuting.
Don't let poor record keeping cost you money or, worse, land you in trouble with HMRC. Start tracking your business mileage properly today, and make sure you're claiming every penny you're entitled to.
Need help setting up a mileage tracking system or reviewing your current claims? Get in touch with Josie Dayment Bookkeeping – we'll make sure you're maximising your allowances while staying completely compliant.
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