HMRC Mileage Rates 2026 - New 55p Rate for Sole Traders Explained

HMRC approved mileage rates let self-employed sole traders and employees claim a tax-free allowance for using their own vehicle on business journeys. From the 2026/27 tax year, the rate for cars and vans increased to 55p per mile for the first 10,000 miles - the first change in 15 years.

This guide explains exactly how the rates work, who can claim, what counts as a business journey, and how to make the claim on your Self Assessment return.

Calculate your mileage claim

Enter your total business miles for the year to see your full claim and estimated tax saving.

What changed in 2026/27?

The HMRC approved mileage allowance payment (AMAP) rate for cars and vans had been fixed at 45p per mile (first 10,000 miles) and 25p per mile (above 10,000 miles) since April 2011 - a rate that had not kept pace with rising fuel and running costs.

From the 2026/27 tax year, HMRC increased the main rate to 55p per mile for the first 10,000 business miles. The 25p rate above 10,000 miles remains unchanged. For a sole trader driving 8,000 business miles per year, this means an additional £800 claimable compared to the old rate.

The HMRC approved mileage rates for 2026/27

Cars and vans

• First 10,000 miles: 55p per mile
• Above 10,000 miles: 25p per mile

Motorcycles

• All miles: 24p per mile (unchanged)

Bicycles

• All miles: 20p per mile (unchanged)

The 10,000-mile threshold

The threshold applies per vehicle across the whole tax year (6 April to 5 April). Once you cross 10,000 business miles in a year, every mile above that earns 25p instead of 55p. Keep a running total through the year so you know when you cross it.

For most sole trader tradesmen driving to and from job sites, the 10,000-mile mark is around 40 miles of business driving per working day - so many will stay within the 55p band for the full year.

The passenger add-on

If you carry a colleague, employee, or subcontractor in your van to a business destination, you can claim an extra 5p per mile per passenger. If you drive a subcontractor to a job site - 120 miles round trip with one passenger - that is an extra £6 on top of your standard mileage claim.

The passenger must be travelling for business purposes. You cannot claim the add-on for personal passengers.

Who can claim HMRC mileage rates?

Sole traders (self-employed)

If you are self-employed, you can use HMRC approved mileage rates instead of claiming your actual vehicle running costs. This is called the simplified expenses method. You claim the mileage on your Self Assessment return (SA103S or SA103F, the self-employment supplementary pages).

The simplified mileage method covers all car running costs - fuel, insurance, servicing, repairs, road tax, and MOT. You cannot claim these separately if you use the mileage rate. You can still claim interest on a business car loan separately.

Important: Once you choose the mileage method for a vehicle, you must stick with it for as long as you use that vehicle for business. You cannot switch to actual costs mid-way.

Employees

If your employer reimburses you at less than the HMRC rate, you can claim the difference as a tax relief. If they reimburse at more than the HMRC rate, the excess is taxable as a benefit in kind.

What counts as a business journey?

A business journey is travel that is wholly and exclusively for business purposes. For tradesmen, this typically includes:

• Driving to a client's job site
• Driving to a merchant or supplier to collect materials
• Driving to an office, depot, or yard that is not your home
• Driving to a training course related to your trade

The journey from your home to your regular workplace is not a business journey and cannot be claimed. If you are a sole trader who works from home or travels directly to job sites each day, your home can be treated as your workplace - making most of your journeys claimable.

What records does HMRC require?

HMRC requires a contemporaneous mileage log - a record made at the time of the journey, not reconstructed later. Your log should include:

• Date of the journey
• Start and end address (postcodes are acceptable)
• Business purpose of the journey
• Miles driven
• Running total of miles for the tax year

HMRC can ask for mileage records up to 6 years after the tax year. A mileage log on paper, in a spreadsheet, or in an app all satisfy the requirement - as long as the record is complete and made at the time.

A reconstruction of mileage from memory or from a sat-nav history will not satisfy HMRC in an enquiry. Log trips at the time.

The easiest way to stay compliant is to log each trip as you go. The free mileage log builder lets you add journeys, auto-calculate distances, and download a ready-to-use PDF that meets HMRC requirements.

How to claim mileage on Self Assessment

Mileage is claimed as an expense on your Self Assessment return. On the SA103S (short self-employment pages) or SA103F (full pages):

1. Calculate your total business miles for the year
2. Apply the HMRC rates: 55p for the first 10,000 miles, 25p above
3. Add any passenger allowance if applicable
4. Enter the total figure in the Motor expenses field
5. Note in the white space that you are using the simplified mileage method

The mileage claim reduces your profit, which reduces the income tax and National Insurance you pay.

Mileage vs actual costs - which is better?

For most sole trader tradesmen with a van, the mileage method is simpler and often produces a similar result to actual costs. The advantage is you do not need to track every fuel receipt, service invoice, and insurance renewal.

Actual costs can produce a higher claim if your vehicle is expensive to run (high insurance, high fuel consumption) or if you drive very high business mileage. The break-even point is generally around 8,000 to 12,000 business miles per year depending on the vehicle.

If you are not sure which method is better for your situation, ask an accountant to run both calculations in your first year - you can then choose whichever produces the higher deduction and stick with it.

To work out how your mileage claim affects your overall tax bill, use the self-employed tax calculator.

Frequently asked questions

How do I claim back mileage from HMRC?

Sole traders claim business mileage as an expense on their Self Assessment return. Add up your total business miles for the tax year, apply the HMRC rates (55p for the first 10,000 miles, 25p above), and enter the total in the Motor expenses field on your SA103.

Employees who are not fully reimbursed by their employer can claim the shortfall as mileage allowance relief. You can do this either through a P87 form (for claims under £2,500) or through your Self Assessment return if you complete one.

What is mileage allowance relief?

Mileage allowance relief (MAR) is the tax relief available when you use your own vehicle for business travel but are not reimbursed at the full HMRC approved rate. If you are employed and your employer pays less than 55p per mile, you can claim relief on the difference - reducing your income tax bill.

For sole traders, the concept works slightly differently: you claim the full HMRC mileage rate as a business expense on Self Assessment, which reduces your taxable profit. The end result is the same - you get tax relief on your business mileage.

Can I claim mileage if I use my personal car for work?

Yes. The HMRC approved mileage rate applies to any vehicle you own personally and use for business - whether it is registered for personal or business use. The rate covers all running costs including fuel, so you do not need to keep fuel receipts if you use the mileage method.

Can I claim mileage for an electric van?

Yes. From 2023/24, HMRC confirmed that the 45p/25p rates (now 55p/25p) apply to electric vehicles as well as petrol and diesel. There is no separate advisory electric rate for self-employed mileage claims - the same rates apply regardless of fuel type.

What if my employer pays me more than 55p per mile?

If you are employed and your employer reimburses you above the HMRC approved rate, the excess is treated as a taxable benefit and must be reported on a P11D. Most employers reimburse at or below the approved rate to avoid this.

Do I need a separate mileage log for each vehicle?

Yes. If you use more than one vehicle for business (for example, you switch vans mid-year), you need separate records and separate 10,000-mile counts for each vehicle. The threshold does not carry across vehicles.

Does the 10,000-mile threshold reset each tax year?

Yes. The 10,000-mile threshold is per vehicle, per tax year. Every 6 April your mileage count resets to zero and the 55p rate applies again from the first mile.