Scope: For sole traders and eligible partnerships using a vehicle for business. Employee mileage rules and Universal Credit reporting are separate.
The 2026 to 2027 rates
For simplified vehicle expenses in 2026 to 2027, HMRC’s rates are:
| Vehicle | Business miles | Rate |
|---|---|---|
| Cars and goods vehicles | First 10,000 | 55p per mile |
| Cars and goods vehicles | Above 10,000 | 25p per mile |
| Motorcycles | All qualifying miles | 24p per mile |
The 55p rate is a change from the 45p rate that applied through 2025 to 2026. Always label a mileage rate with its tax year.
Which journeys count
Only journeys wholly and exclusively for the trade, or an identifiable business portion, count. Private trips and ordinary travel from home to a normal place of business do not qualify.
Record date, start, destination, business purpose, vehicle and business miles at the time of travel. A year-end estimate from fuel spending does not establish qualifying mileage.
What the mileage rate covers
The simplified rate represents acquisition, ownership, hire, leasing and running costs, including fuel, servicing, repairs, insurance, vehicle tax, MOT and depreciation. Those costs cannot also be deducted for the same vehicle when mileage basis is used.
Journey-specific parking, tolls and congestion charges are not included and may be claimed separately where incurred solely for business. Fines are not converted into business expenses merely because they arose during work.
Actual-cost method
Instead of mileage basis, calculate the business portion of actual running costs and apply the appropriate capital or cash-basis treatment to the vehicle. Keep invoices, total mileage and business mileage to support the apportionment.
The actual method can be better or worse depending on vehicle cost, usage and records. Compare before first adopting mileage basis for a vehicle.
Method consistency
Once mileage basis is adopted for a vehicle, it generally must continue while that vehicle remains in the business. Actual vehicle costs and capital allowances cannot also be claimed for it. A change of method normally occurs when the vehicle is replaced.
Mileage basis is also unavailable where capital allowances or certain cash-basis acquisition deductions have already been claimed for that vehicle.
Worked mileage example
A car has 12,000 qualifying business miles in 2026 to 2027:
- first 10,000 × 55p = £5,500;
- remaining 2,000 × 25p = £500;
- simplified vehicle deduction = £6,000.
Qualifying business parking could then be considered separately. Private mileage, fuel and insurance cannot be added to the mileage deduction.
This illustrates the flat-rate arithmetic, not whether the journeys qualify.
Several vehicles and users
Keep a log for each vehicle. The 10,000-mile band applies under HMRC’s business rules, so use the current guidance when vehicles are added, replaced or used across activities. Employee-provided vehicles and company arrangements do not automatically follow the sole-trader simplified scheme.
Common mistakes
- Using 45p for 2026 to 2027.
- Claiming commuting miles.
- Adding fuel to the mileage deduction.
- Switching methods for the same continuing vehicle.
- Claiming capital allowances and mileage together.
- Keeping only odometer totals without business purpose.
- Mixing employee reimbursement rates with sole-trader tax rules.
What to do next
- Identify every vehicle and earlier method used.
- Keep contemporaneous business-mile logs.
- Exclude private and ordinary commuting journeys.
- Compare mileage basis with actual costs before adoption.
- Apply the correct tax-year rate.
- Retain journey charges and vehicle records separately.