Car Mileage & Vehicle Costs — United Kingdom Tax Rules

Claim business mileage at HMRC's approved rates or deduct actual vehicle running costs.

Claimable: Partially claimable · Tax authority: HMRC

HMRC Rules

• HMRC approved mileage rates for 2024/25: 45p/mile for the first 10,000 miles per tax year, then 25p/mile.
• Motorcycles: 24p/mile for all business miles. Bicycles: 20p/mile for all business miles.
• The mileage rate covers all running costs — fuel, insurance, servicing, repairs, and depreciation — so you cannot claim these separately if using the rate.
• Alternatively, claim actual costs (fuel, insurance, repairs, MOT, depreciation) — but you cannot mix methods for the same vehicle.
• Commuting from home to a regular fixed workplace is NOT claimable as business travel.
• If you have a home office (HMRC-accepted), all journeys from home are business travel and claimable.

Limits

No cap on business miles claimed, but the rate drops from 45p/mile to 25p/mile after 10,000 miles per tax year.

Worked Example

James drives 8,000 business miles in 2024/25. He claims 8,000 × 45p/mile = £3600. If he drove 12,000 business miles: 10,000 × 45p/mile + 2,000 × 25p/mile = £4500 + £500 = £5000. His mileage log records the date, start point, destination, purpose, and miles for every journey.

Record Keeping

• Maintain a mileage log: date, start/end location, purpose, miles for every business journey
• Keep fuel receipts if using the actual cost method
• Record odometer readings at the start and end of each tax year
• Separate business miles from personal and commuting miles
• If using actual costs, retain all insurance, servicing, MOT, and repair receipts

Frequently Asked Questions

Can I claim my daily commute as business mileage?

No. Travel between home and a regular workplace is personal commuting — not claimable. However, if you work from home (HMRC-accepted home office), then all journeys from home to client sites or temporary work locations are business travel and fully claimable at 45p/mile/mile.

Which is better — the mileage rate or actual costs?

The mileage rate is simpler and usually better for moderate mileage with a mid-size car. Actual costs may be better for high mileage with a fuel-efficient vehicle or if you have significant repair bills. Calculate both and compare — but remember you cannot switch methods for the same vehicle once you've chosen.

Can I claim mileage for an electric vehicle?

Yes. The same 45p/mile/25p/mile HMRC approved rates apply to electric vehicles when using the mileage method. If using actual costs instead, you can claim the proportion of electricity used for business charging, as well as depreciation and other running costs.

What happens if I cross the 10,000 miles threshold mid-year?

The rate drops from 45p/mile to 25p/mile from mile 10,001 onwards within the same tax year (6 April to 5 April). You do not need to do anything special — just apply the correct rate to each band when calculating your total claim. AnyDayAnyTax handles this automatically.

Can I claim passenger mileage payments?

Yes. If you carry a business passenger in your car, you can claim an additional 5p per mile per passenger on top of the normal 45p/mile/25p/mile rates. This covers the additional fuel cost of carrying a passenger. Keep a record of the passenger and purpose of each journey.