The mileage allowance for the self-employed has been stuck at 45p per mile since 2011. From 6 April 2026, it finally moved — up to 55p per mile for the first 10,000 business miles in the tax year. If you drive regularly for work, that difference adds up quickly.

But the rate change is only part of the story. A lot of self-employed people either don’t claim mileage at all, or they claim it alongside fuel receipts without realising the two methods are mutually exclusive. The rules here are simple once you know them, but getting them wrong means either leaving money on the table or overclaiming — neither of which is a good position on a Self Assessment return.

Here’s how the mileage allowance works, what changed in April 2026, what the rate actually covers, and when you might be better off claiming actual costs instead.

HMRC’s approved mileage rate for cars and vans — used by both employees and self-employed individuals — increased to 55p per mile for the first 10,000 business miles in the 2026–27 tax year. The previous rate of 45p had been in place since 2011, so this is a meaningful update.

The rate for miles above 10,000 in the same tax year stays at 25p per mile. If you’re a sole trader who puts in serious mileage, the two-tier structure still applies: the first 10,000 miles at 55p, everything beyond that at 25p.

Motorcycle rates are unchanged at 24p per mile. Bicycles remain at 20p per mile.

The change is effective from 6 April 2026 and applies to the full 2026–27 tax year. For most self-employed people filing a Self Assessment return for 2026–27, you’ll use 55p across all eligible business miles up to 10,000, even for journeys made before this blog was written. The government legislated for this retrospectively, which is slightly unusual, but it means no one needs to split their mileage log by date within the year.

To put the numbers in context: if you drive 8,000 business miles in 2026–27, the difference between the old and new rate is £800 in deductible expenses — which, at the basic rate of Income Tax, is worth £160 back in your pocket.

This is where a lot of people trip up. The simplified mileage rate covers everything to do with running that vehicle — fuel, insurance, servicing, tyres, MOT, depreciation. All of it is bundled into that single per-mile figure.

That means if you’re using simplified mileage expenses, you can’t then also claim fuel receipts separately, or write off your insurance premium, or include a capital allowance for the vehicle. HMRC treats the flat rate as the complete deduction for vehicle costs. Claiming on top of it is overclaiming, and it’s the kind of error that draws attention on a return.

The one thing you can still claim separately is business-related parking and road tolls. Those aren’t folded into the mileage rate — they sit alongside it as direct costs.

What counts as a business mile matters too. Travelling from your home to a client’s site counts, provided your home is your base of operations (which is usually the case for sole traders and tradespeople). Commuting to a fixed, permanent workplace you rent separately is a different situation. If there’s any ambiguity in your setup, it’s worth checking before you build up a mileage log based on assumptions.

Most self-employed people with a single vehicle used for both business and personal journeys will find simplified mileage simpler and often more generous. You don’t need to keep fuel receipts, split insurance costs, or work out a business-use percentage — you just log your miles and apply the rate.

The actual costs method works differently. You record all your vehicle running costs across the year, work out the percentage of miles driven for business purposes, and claim that proportion of total costs. If your vehicle is expensive to run, or you use it almost entirely for business, actual costs can produce a higher deduction. A high-mileage van driver with significant fuel and maintenance bills is one scenario where it’s worth running the numbers.

There are two firm rules that govern the choice. First, if you’ve already claimed capital allowances on a vehicle in a previous year, you can’t use simplified mileage for that vehicle — you’re committed to actual costs for its lifetime. Second, whichever method you choose for a given vehicle, you stick with it. You can’t switch back and forth depending on which produces a better result each year.

For most people starting out as self-employed, or those with a standard car used partly for personal journeys, simplified mileage is the practical default. It removes a lot of record-keeping burden and the rate increase makes it more competitive than it was.

The rate is straightforward. The record-keeping is where people create problems for themselves.

HMRC expects you to be able to demonstrate that the miles you’ve claimed were genuine business journeys. A mileage log doesn’t need to be elaborate, but it does need to show: the date of each journey, where you travelled from and to, the business purpose, and the miles covered. A spreadsheet works. So does a dedicated mileage app — several of them pull GPS data automatically, which takes most of the effort out of it.

What HMRC doesn’t accept is an estimate at year-end based on a rough idea of how much you drove. If you’ve never kept a log and you’re about to prepare a Self Assessment return, now is a reasonable time to start — at a minimum for the remaining months of the current tax year.

One practical point worth flagging: your mileage claim should cross-reference sensibly with your other records. If you’re claiming 12,000 business miles but your business calendar shows you rarely left the house, that inconsistency is a problem. Keep your log alongside your invoices and diary and the whole thing holds together.