Mileage claims for sole traders: 45p/25p, apps, and audit-proof logs

If you are using your personal car to visit clients, scout locations, or pick up supplies, you are sitting on a tax-deductible goldmine that most UK sole traders drastically under-report. HMRC isn't exactly handing out free cash, but their mileage allowance is designed to cover not just fuel, but the wear and tear, insurance, and depreciation of your vehicle. The trick is proving it without spending your entire Sunday morning squinting at Google Maps and old receipts.

The 45p/25p Rule: How the maths works in 2025/26

For sole traders and small business owners, HMRC offers a shortcut called 'Simplified Expenses'. Instead of calculating the exact proportion of your car's insurance, road tax, and repairs that relate to business use, you simply track your miles and apply a flat rate.

• First 10,000 business miles (cars and vans): 45p per mile
• After 10,000 business miles: 25p per mile
• Motorcycles: 24p per mile (flat rate)
• Bicycles: 20p per mile (yes, this counts if it's for business!)

It is important to remember that these rates are the maximum you can claim without creating a taxable benefit. If you are a sole trader, you simply deduct this total from your self-employed profits on your Self Assessment to lower your tax bill.

A worked example: The £4,000 profit shield

Let’s look at a realistic scenario for a freelance videographer based in Manchester. Suppose you drive 12,000 miles in the tax year purely for client shoots and location scouting.

1. First 10,000 miles x 45p = £4,500
2. Remaining 2,000 miles x 25p = £500
3. Total mileage claim = £5,000

If your total income was £40,000 and you had no other expenses, this mileage claim alone reduces your taxable profit to £35,000. For a basic rate taxpayer in the 2025/26 bracket (which runs up to £50,270), this claim saves you £1,000 in Income Tax and roughly £300 in Class 4 National Insurance (now 6%).

What counts as a 'Business Mile'?

HMRC's golden rule is that the journey must be 'wholly and exclusively' for business purposes. This is where most founders get into hot water during an audit. If you drive to a client meeting but stop at a massive Tesco on the way back for your weekly shop, only the portion specifically for the client meeting is technically claimable.

• Travel to a temporary workplace (a client's office or a pop-up site).
• Travel to buy stock, materials, or equipment.
• Trips to the bank or post office for business-specific tasks.
• Travel to professional seminars or networking events.

Note that 'commuting'—the drive from your home to a permanent place of work—is almost never claimable. If you rent a fixed desk in a London co-working space every day, that journey is personal. If you work from your spare bedroom, however, your home is your base, and almost every trip to a client becomes a claimable business mile.

Audit-proofing your mileage logs

If HMRC ever asks to see your records, 'I think I drove about 200 miles a week' won't cut it. You need a contemporaneous record. This means logging it as you do it, or at least weekly. A valid log must contain the date, the start and end point (postcodes are best), the purpose of the trip, and the total miles.

"I used to spend two days every April scrolling through my Google Maps timeline trying to recreate my year. It was a nightmare. Now I use an automated tracker; it's the difference between a five-minute task and a weekend of stress."

To keep your finances even cleaner, consider using a dedicated business account like Tide. You can get a free UK business account (using code REFER200 for a £200 bonus) and keep your vehicle-related spend, like parking and occasional fuel top-ups, entirely separate from your personal grocery spend. It makes the end-of-year reconciliation significantly faster.

The Best Apps to Automate the Grunt Work

You don't need to carry a physical diary in your glovebox anymore. Modern apps run in the background and use your phone's GPS to detect when you're driving. You simply swipe right for business or left for personal at the end of the day.

• MileIQ: The gold standard. It captures journeys automatically and provides HMRC-ready reports in one click.
• QuickBooks Self-Employed: If you already use them for bookkeeping, their built-in mileage tracker is excellent and doesn't cost extra.
• Driversnote: A great option for those who want a free tier for a limited number of trips per month.

The 5p Passenger Perk

Not many people know this, but if you are carrying a fellow employee or business partner in your car for a business trip, you can claim an additional 5p per mile, per passenger. For a sole trader, this usually applies if you have a registered employee or if you operate as a Limited Company.

If you are a solo freelancer taking a friend along for the ride who has nothing to do with the business, you cannot claim the extra 5p. HMRC is quite strict on the 'passenger must be on business' rule.

VAT on Mileage: The Hidden Bonus

If your business hits the £90,000 VAT threshold (upped in the recent budget), mileage gets a bit more complex but more rewarding. You can actually reclaim the VAT element of the fuel portion of your 45p mileage claim.

HMRC publishes 'Advisory Fuel Rates' every quarter. You use these to work out how much of that 45p is considered to be fuel. For a 2.0L diesel car, the fuel element might be 13p. You can then reclaim the 20% VAT on that 13p portion, provided you keep your fuel receipts. It’s a small amount per mile, but over 10,000 miles, it’s worth hundreds of pounds back from the taxman.

The bottom line: Don't leave money on the tarmac

The 45p per mile allowance is one of the most generous 'simplified' rules HMRC offers. By switching from a 'best guess' approach to a digital logging system, most UK founders find they can claim 15-20% more than they used to, simply by capturing all those short trips to the post office or the stationers. Get an app, track every mile, and keep your fuel receipts—even if you're using simplified expenses—just in case of a VAT inspection. Your future self at Self Assessment time will thank you.