Can Sole Traders Claim 55p Per Mile for Business Travel in 2026?

Introduction to Approved Mileage Allowance Payments (AMAPs) for Sole Traders

For sole traders in the UK, managing business expenses efficiently is crucial for reducing taxable profit and ensuring tax compliance. One of the most significant and frequently claimed expenses relates to business travel using personal vehicles. The system designed for this is known as Approved Mileage Allowance Payments, or AMAPs. These rates provide a simplified way for sole traders to claim tax relief for the running costs of their personal cars, vans, motorcycles, or bicycles when used for business journeys, without needing to track every single fuel receipt or maintenance bill.

A notable update to these allowances is set to take effect from 6 April 2026. From this date, the AMAP rate for cars and vans will increase from 45p to 55p per mile for the first 10,000 business miles in a tax year. This upward adjustment represents a meaningful enhancement in tax relief for self-employed drivers, mobile freelancers, consultants, and anyone else who regularly uses their personal vehicle for work-related travel. The change is designed to reflect the ongoing costs of vehicle ownership and operation, offering greater financial relief to those who incur these essential business outlays.

This comprehensive guide will delve into the intricacies of claiming mileage allowance as a sole trader in the UK. We will cover the specific new rates effective from April 2026, outline who is eligible to make these claims, provide detailed examples of how to calculate your allowance, and discuss the critical importance of accurate record keeping. Furthermore, we will explore the alternative of claiming actual vehicle expenses, examine how mileage claims integrate with your Self Assessment tax return, and touch upon the implications of Making Tax Digital for Income Tax Self Assessment (MTD ITSA) for your travel expense management. Understanding these rules is essential for optimising your tax position and maintaining robust financial records.

The Significant Change: Mileage Allowance Rates from 6 April 2026

The government has announced a key update to the Approved Mileage Allowance Payments (AMAPs) that will directly impact sole traders and other self-employed individuals in the UK. From the start of the 2026/27 tax year, beginning on 6 April 2026, the primary mileage rate for cars and vans will see a substantial increase.

The New Standard Rate for Cars and Vans

Effective from 6 April 2026, the AMAP rate for business travel in personal cars and vans will rise from 45p to 55p per mile for the first 10,000 business miles driven in a tax year. This 10p increase per mile for the initial threshold represents a significant boost in the tax-free allowance that sole traders can claim against their profits.

This change is particularly beneficial for those who undertake frequent or long-distance business journeys, as it allows a greater portion of their vehicle running costs to be offset against their taxable income.

Comparison to Previous Rates

To put this change into perspective, consider the rates applicable before 6 April 2026:

• Previous Rate (Cars and Vans): 45p per mile for the first 10,000 business miles.
• New Rate (Cars and Vans from 6 April 2026): 55p per mile for the first 10,000 business miles.

Rates Beyond 10,000 Miles

It is important to note that the rate for business miles exceeding 10,000 in a single tax year remains unchanged:

• Cars and Vans (over 10,000 miles): 25p per mile. This rate applies to all subsequent business miles once the 10,000-mile threshold has been surpassed.

Other Vehicle Types

While the primary focus of the change is on cars and vans, the rates for other vehicle types used for business travel are expected to remain consistent with current allowances:

• Motorcycles: 24p per mile.
• Bicycles: 20p per mile.

Passenger Allowance

In addition to the per-mile rates for the vehicle, sole traders can also claim a passenger allowance under specific conditions:

• Passenger Allowance: 5p per mile per passenger. This can be claimed when carrying a fellow employee or another person on a business journey, provided that person is also travelling for business purposes. This allowance is separate from the vehicle mileage rate and can be claimed on top of it.

Summary Table of Mileage Allowance Rates

The following table summarises the mileage allowance rates, highlighting the upcoming change for cars and vans:

Vehicle Type	Miles per Tax Year	Rate (Before 6 April 2026)	Rate (From 6 April 2026)
Cars and Vans	First 10,000 miles	45p	55p
Cars and Vans	Over 10,000 miles	25p	25p
Motorcycles	All business miles	24p	24p
Bicycles	All business miles	20p	20p
Passenger Allowance	Per passenger, per business mile	5p	5p

Context and Impact of the Change

The decision to increase the mileage allowance rate reflects several factors, including:

• Inflationary Pressures: The rising cost of fuel, vehicle maintenance, insurance, and other associated running costs have made the previous 45p rate less reflective of actual expenses.
• Cost of Living: The increase offers a practical form of tax relief to self-employed individuals facing broader increases in living and operating costs.
• Government's 'Simplification, Modernisation, and Fairness' Agenda: This adjustment aligns with HMRC's stated goals of ensuring the tax system remains fair and responsive to current economic realities.

For sole traders, this increase means a more generous deduction for their business travel. For example, a sole trader covering 10,000 business miles in a year will be able to claim £5,500 from April 2026, compared to £4,500 previously, resulting in an additional £1,000 reduction in their taxable profit. This directly translates into lower Income Tax and Class 4 National Insurance contributions, providing tangible financial relief. It also encourages accurate record keeping by making the claim more worthwhile.

Eligibility and Conditions for Claiming Mileage Allowance as a Sole Trader

Understanding who can claim Approved Mileage Allowance Payments (AMAPs) and under what circumstances is fundamental for sole traders. HMRC sets specific criteria to ensure that only legitimate business expenses are claimed.

Definition of a Sole Trader for AMAPs

AMAPs are primarily designed for individuals who are self-employed and use their personal vehicles for business purposes. As a sole trader, you fit this description. This includes:

• Freelancers.
• Consultants.
• Tradespeople.
• Small business owners.
• Anyone operating a business as an individual, rather than through a limited company or partnership (though partners in a partnership can also claim AMAPs).

The key is that you are an individual incurring costs for your self-employed business.

Personal Vehicle Requirement

To claim AMAPs, the vehicle used for business travel must be your personal vehicle. This means:

• Owned by you: The car, van, motorcycle, or bicycle must be registered in your name.
• Leased by you: If you lease a vehicle personally, it also qualifies.

Crucially, if the vehicle is considered a business asset within your accounting records and you claim capital allowances on its purchase, you cannot claim AMAPs for that vehicle. In such cases, you would claim the actual running costs of the vehicle (fuel, insurance, repairs, etc.), along with the capital allowances. This is a critical distinction, as you cannot double-claim for vehicle costs. Most sole traders with a personal vehicle used for business choose AMAPs due to their simplicity, reserving actual costs and capital allowances for vehicles that are explicitly purchased or leased as business assets.

What Constitutes 'Business Travel'?

The 'wholly and exclusively' rule is paramount here. Business travel refers to journeys undertaken purely for the purposes of your trade, profession, or vocation. It specifically excludes regular commuting.

Examples of Allowable Business Travel:

• Travel between different workplaces: If you operate from multiple locations or have clients spread across different areas, travel between these sites is allowable.
• Travel to client sites: Visiting clients for meetings, project work, or service delivery.
• Travel to suppliers: Journeys to collect materials, equipment, or attend supplier meetings.
• Travel to training courses or conferences: If the training is directly related to improving skills for your existing business.
• Travel to networking events: Events designed to promote your business or gain new contacts.
• Travel to a temporary workplace: If you regularly work from home and travel to a temporary office or client site that is not your usual place of work.

Examples of Non-Allowable Travel (Commuting and Personal Journeys):

• Ordinary Commuting: Travel from your home to a regular, fixed place of work (e.g., an office you own or rent full-time, or a client site you visit daily for an extended period) is generally considered ordinary commuting and is not allowable. Even if you work from home, travel to your primary business premises is often seen as commuting.
• Personal Journeys: Any travel for personal reasons, such as shopping, visiting friends, or family holidays, cannot be claimed.
• Dual Purpose Journeys: If a journey has both a business and a personal element, only the portion directly attributable to business can be claimed. For instance, if you visit a client on the way to a personal appointment, you can only claim the mileage from your home to the client and back to your home, or the additional mileage incurred to visit the client if it's a detour.

The 'wholly and exclusively' rule means that the primary and sole reason for the journey must be business-related. If there's a significant personal benefit that isn't incidental, the claim may be disallowed.

Understanding the Tax Relief Mechanism

When you claim AMAPs, the total mileage allowance calculated is treated as an allowable expense in your Self Assessment tax return. This means it is deducted from your gross business income before your taxable profit is determined. By reducing your taxable profit, your Income Tax and Class 4 National Insurance contributions are consequently lowered.

For example, if your gross income is £30,000 and you claim £5,500 in mileage allowance, your taxable profit becomes £24,500 (before other expenses). This direct reduction significantly impacts your overall tax liability, making accurate and diligent record-keeping of business mileage a financially beneficial practice.

In summary, sole traders can claim AMAPs if they use their personal vehicle for legitimate business travel, provided they do not claim capital allowances on that vehicle. Maintaining clear distinction between business and personal journeys, and meticulous record-keeping, are paramount to satisfying HMRC's requirements.

How to Calculate Your Mileage Allowance Claim Accurately

Calculating your Approved Mileage Allowance Payment (AMAP) claim is straightforward once you have accurate records of your business mileage. The process involves identifying the total number of business miles driven in a tax year and applying the appropriate rates.

Step-by-Step Calculation Guide

Follow these steps to calculate your mileage allowance:

1. Track All Business Journeys: For every business trip, record the date, start location, end location, purpose of the journey, and the total miles driven. It is advisable to record odometer readings at the start and end of the tax year or for specific vehicles.
2. Determine Total Business Miles: Sum up all the business miles for cars and vans for the entire tax year (6 April to 5 April).
3. Apply the 55p Rate: Multiply the first 10,000 business miles by 55p (from 6 April 2026).
4. Apply the 25p Rate (if applicable): If your total business miles exceed 10,000, subtract 10,000 from the total to find the excess miles. Multiply these excess miles by 25p.
5. Add Other Vehicle Allowances (if applicable): If you use a motorcycle or bicycle for business, calculate the mileage for these separately using their respective rates (24p for motorcycles, 20p for bicycles).
6. Add Passenger Allowance (if applicable): For any business journeys where you carried a business passenger, multiply the miles travelled with the passenger by 5p per passenger.
7. Sum All Components: Add the results from steps 3, 4, 5, and 6 to get your total AMAP claim for the tax year.

Importance of Mileage Records

Accurate and detailed mileage records are not just good practice; they are a legal requirement for making a valid AMAP claim. HMRC can ask to see your records if they query your tax return. Without proper documentation, your claim could be disallowed, potentially leading to penalties and interest.

Your records should clearly show:

• Date of journey: When the travel took place.
• Start and end locations: Where you started and finished.
• Purpose of journey: Why you made the trip (e.g., "Client meeting at ABC Ltd", "Supplier visit to XYZ Wholesalers").
• Total mileage: The distance covered for that specific business trip.
• Vehicle used: Registration number, if you use multiple vehicles.
• Number of passengers: If claiming passenger allowance.

Many sole traders use physical logbooks, spreadsheets, or dedicated mileage tracking apps to maintain these records. Accounting software like AccountsOS can also integrate mileage tracking, making it easier to log and categorise journeys.

Worked Example 1: Sole Trader with Mileage Below 10,000 Miles

Let's consider Sarah, a freelance photographer, who uses her personal car for business. In the tax year 2026/27, she drives 8,000 business miles.

Calculation Component	Details	Calculation	Amount
Business Miles (Car)	First 10,000 miles	8,000 miles x 55p	£4,400.00
Total AMAP Claim			£4,400.00

Sarah can claim £4,400 as an allowable expense against her business profits for the 2026/27 tax year.

Worked Example 2: Sole Trader with Mileage Above 10,000 Miles and Passenger Allowance

Consider David, a business consultant, who uses his personal car for extensive travel. In the tax year 2026/27, he drives 12,500 business miles. For 1,500 of those miles, he also transports a junior colleague (who is also travelling for business purposes).

Calculation Component	Details	Calculation	Amount
Business Miles (Car)	First 10,000 miles	10,000 miles x 55p	£5,500.00
Business Miles (Car)	Remaining 2,500 miles (12,500 - 10,000)	2,500 miles x 25p	£625.00
Passenger Allowance	For 1,500 miles with 1 passenger	1,500 miles x 5p	£75.00
Total AMAP Claim			£6,200.00

David can claim £6,200 as an allowable expense against his business profits for the 2026/27 tax year.

These examples illustrate how the different rates and allowances are applied. Meticulous record-keeping for each journey is the foundation for an accurate and defensible claim.

Choosing Between Mileage Allowance and Actual Vehicle Expenses

Sole traders have two primary methods for claiming the costs of using a personal vehicle for business: the simplified Approved Mileage Allowance Payments (AMAPs) or claiming a proportion of the actual vehicle running costs. The choice between these two methods can significantly impact your tax bill, and it is crucial to understand the implications of each.

The Fundamental Choice: AMAPs (Simplified) vs. Actual Costs (Detailed)

• AMAPs (Simplified Method): As discussed, this involves claiming a fixed rate per mile for business journeys. It's designed for simplicity, reducing the need to track every individual vehicle expense.
• Actual Costs (Detailed Method): This involves calculating and claiming the actual business proportion of all vehicle-related expenses, including fuel, repairs, insurance, and the depreciation of the vehicle (via capital allowances).

Claiming Actual Vehicle Expenses

If you opt for the actual costs method, you will need to meticulously track and record every expense related to your vehicle. The allowable expenses typically include:

• Fuel and Oil: All costs for petrol, diesel, or electricity.
• Repairs and Servicing: Maintenance costs to keep the vehicle roadworthy.
• Insurance: Vehicle insurance premiums.
• Road Tax (Vehicle Excise Duty): The annual tax paid for vehicle ownership.
• Breakdown Cover: Membership fees for breakdown assistance.
• Finance Costs: Interest paid on a loan taken out to purchase the vehicle. The capital repayment portion of a loan is not an allowable expense.
• Capital Allowances: Instead of claiming the full purchase price of the vehicle, you claim capital allowances over several years. The Annual Investment Allowance (AIA) allows you to claim 100% of the cost of most plant and machinery (including vehicles, excluding cars, under specific conditions) up to £1 million in the year of purchase. For cars, different rates of Writing Down Allowances (WDAs) apply based on CO2 emissions.

The Business Proportion: A critical aspect of claiming actual costs is determining the business proportion of use. Since the vehicle is also used personally, you cannot claim 100% of the expenses. You must calculate the percentage of total mileage that is for business purposes and apply this percentage to all your vehicle expenses. For instance, if 70% of your vehicle's annual mileage is for business, you can claim 70% of your fuel, insurance, repairs, and capital allowances.

When to Opt for AMAPs

The simplified AMAP method is often more advantageous for sole traders who:

• Have High Business Mileage: Especially if their actual running costs per mile are lower than the AMAP rate. The 55p rate (from 6 April 2026) is quite generous and may exceed the actual per-mile cost for many fuel-efficient vehicles.
• Prioritise Simplicity: AMAPs drastically reduce the administrative burden of tracking every receipt and calculating business-to-personal use ratios for multiple expense types.
• Have Lower Vehicle Running Costs: If your vehicle is economical to run, the fixed AMAP rate might offer a higher deduction than your actual costs.

When to Opt for Actual Costs

The actual costs method might be more beneficial for sole traders who:

• Have Low Business Mileage: If you don't travel extensively for business, the fixed AMAP rate might not provide a significant deduction, and your actual costs (especially including capital allowances) could be higher.
• Have High Vehicle Running Costs: This could be due to an older vehicle requiring frequent repairs, a less fuel-efficient vehicle, or a high-value vehicle where capital allowances are substantial.
• Use an Expensive or High-Emitting Vehicle: If you can claim significant capital allowances (e.g., under AIA for a van or certain cars) or have high fuel costs for a large, less efficient vehicle, the actual costs method may yield a larger tax deduction.
• Purchase a Vehicle Specifically for Business: If you buy a van or a specific car primarily for business use and want to claim the capital allowances, you must use the actual costs method.

The 'Once Chosen' Rule

A crucial rule to remember is that once you choose to claim actual expenses (including capital allowances) for a specific vehicle, you cannot switch back to claiming AMAPs for that vehicle in subsequent tax years. This applies for as long as you own that particular vehicle and use it for business. If you later acquire a new vehicle, you can then make a fresh decision for the new vehicle. This rule reinforces the importance of careful consideration when making your initial choice.

Worked Example 3: Comparing AMAPs vs. Actual Costs

Let's consider Emily, a landscape gardener, for the 2026/27 tax year. She drives 7,000 business miles in her van.

Scenario A: Claiming AMAPs

Calculation Component	Details	Calculation	Amount
Business Miles (Van)	First 10,000 miles	7,000 miles x 55p	£3,850.00
Total AMAP Claim			£3,850.00

Scenario B: Claiming Actual Costs

Emily's van was purchased for £20,000. Her total vehicle expenses for the year are:

• Fuel: £1,800
• Insurance: £600
• Repairs/Servicing: £400
• Road Tax: £300
• Capital Allowance (using AIA for a van): £20,000 (claimed in year 1) Her total mileage for the year (business + personal) is 10,000 miles, with 7,000 business miles. So, her business use percentage is 70% (7,000/10,000).

Calculation Component	Total Expense	Business Proportion (70%)	Amount Claimed
Fuel	£1,800	70%	£1,260.00
Insurance	£600	70%	£420.00
Repairs/Servicing	£400	70%	£280.00
Road Tax	£300	70%	£210.00
Capital Allowance	£20,000	70%	£14,000.00
Total Actual Cost Claim			£16,170.00

In this example, claiming actual costs (especially with a large capital allowance claim in the first year) is significantly more beneficial for Emily than claiming AMAPs. However, in subsequent years, when the capital allowance claim is much smaller (or none, if AIA was fully used), the AMAP method might become more attractive.

The best approach depends on your specific circumstances, including your vehicle's running costs, purchase price, and annual business mileage. It is often wise to perform a quick calculation for both methods to determine which offers the greatest tax advantage for your particular business in each tax year, especially for new vehicles.

Comprehensive Record Keeping for Business Travel Expenses

Maintaining accurate and organised records for all your business expenses, especially travel costs, is not merely good practice; it is a fundamental legal requirement for sole traders in the UK. HMRC mandates that you keep sufficient records to support all claims made on your Self Assessment tax return. Without robust documentation, your claims could be challenged or disallowed, potentially leading to penalties and interest.

Legal Requirement and Why it Matters

HMRC requires sole traders to keep full and accurate records of their business income and expenses. For business travel, this means being able to demonstrate that the journeys were genuinely for business purposes and that the mileage or costs claimed are accurate. These records form the basis of your tax return and serve as evidence if HMRC ever decides to open an enquiry into your tax affairs.

Good record keeping also benefits your business by:

• Ensuring Compliance: Helps you meet your legal obligations.
• Maximising Deductions: Ensures you claim all allowable expenses, reducing your tax bill.
• Providing Financial Insight: Helps you understand your business's true running costs.
• Saving Time: Makes preparing your Self Assessment return much quicker and less stressful.

What to Record for Mileage Claims (AMAPs)

If you are claiming AMAPs, your records must clearly distinguish between business and personal mileage. For each business journey, you should record:

• Date of Travel: The specific date the journey occurred.
• Origin and Destination: The starting point and end point of the trip. This helps to establish the nature of the journey.
• Purpose of Journey: A brief but clear description of the business reason for the travel (e.g., "Client meeting - ABC Ltd", "Collecting supplies - XYZ Wholesalers", "Conference attendance").
• Total Mileage: The exact distance covered for that specific business trip. This can be derived from odometer readings or a reliable mapping tool.
• Vehicle Used: If you use multiple vehicles for business, note the registration number of the vehicle used for that journey.
• Number of Passengers: If you are claiming the passenger allowance, record the number of business passengers carried.

Example Mileage Log Entry:

Date	From	To	Purpose	Miles	Passengers
2026-06-15	Home Office	Client A	Project kick-off meeting	42	0
2026-06-18	Home Office	Supplier Depot	Collect materials	18	0
2026-06-20	Home Office	Conference Ctr	Industry seminar	55	1
2026-06-25	Client A	Client B	Follow-up meeting / New lead	25	0

What to Record for Actual Vehicle Expenses

If you opt to claim actual vehicle expenses, your record-keeping requirements become more extensive. You need to keep:

• All Receipts and Invoices: For fuel, oil, repairs, servicing, insurance, road tax, breakdown cover, and any other vehicle-related costs. These should be dated and clearly show the amount and supplier.
• Proof of Vehicle Purchase/Lease: Documentation for the acquisition of the vehicle, necessary for claiming capital allowances.
• Detailed Mileage Log: Even with actual expenses, you need a mileage log to accurately determine the business proportion of your total vehicle use. This log should include both business and personal mileage to allow for a precise calculation of the percentage of business use.

Methods of Record Keeping

Sole traders have several options for maintaining their travel records:

• Manual Logbooks: Traditional paper logbooks are still acceptable, provided they are filled out diligently and accurately for every journey.
• Spreadsheets: Digital spreadsheets (e.g., Excel, Google Sheets) can be effective, allowing for easy calculation and summarisation of mileage.
• Mileage Tracking Apps: Numerous smartphone apps are available that use GPS to automatically track journeys, categorise them as business or personal, and generate reports. Examples include MileIQ, Tripcatcher, and Everlance.
• Integrated Accounting Software: Modern accounting software, such as AccountsOS, often includes features for expense tracking and sometimes even mileage logging. These platforms allow you to upload receipts, categorise expenses, and generate comprehensive reports for your Self Assessment. This is particularly beneficial for MTD ITSA compliance.

Retention Period

You must keep your business records, including travel expense documentation, for at least 5 years after the 31 January submission deadline of the relevant tax year.

Example: For the tax year 2026/27, which ends on 5 April 2027, the online Self Assessment filing deadline is 31 January 2028. Therefore, you must retain all records for that tax year until at least 31 January 2033.

It is often prudent to keep records for longer, especially if your business affairs are complex or if you believe there is a chance of future HMRC enquiries. Digital storage solutions make long-term retention straightforward and space-efficient.

Integrating Mileage Claims with Your Self Assessment Tax Return

For sole traders, all business income and allowable expenses, including mileage allowance claims, are reported through the Self Assessment tax return system. Understanding how to correctly declare your mileage allowance is crucial for accurately calculating your tax liability.

Where to Declare on the Self Assessment Form

When you complete your Self Assessment tax return online, you will typically use the SA103 (Self-Employment) supplementary pages to declare your business income and expenses. Within these pages, there is a specific section for "Motor expenses" or "Travel expenses."

• If you are claiming Approved Mileage Allowance Payments (AMAPs), you will declare the total calculated AMAP figure in the relevant box for motor expenses. This figure represents the sum of all your business mileage at the approved rates, including any passenger allowance. You do not need to itemise fuel, insurance, etc., separately if you are using AMAPs.
• If you are claiming actual vehicle expenses, you will declare the business proportion of your fuel, repairs, servicing, insurance, road tax, and any other direct running costs in the motor expenses section. Additionally, any capital allowances claimed for the vehicle will be declared in a separate section for capital allowances.

It is important to ensure that you only claim one method for each vehicle in a given tax year to avoid errors and potential penalties for inaccurate returns.

How Mileage Allowance Reduces Taxable Profit

The core benefit of claiming mileage allowance (or actual expenses) is that it is treated as an allowable business expense. This means the total amount claimed is deducted from your gross business income before your taxable profit is calculated.

Formula: Gross Business Income - Allowable Business Expenses (including mileage allowance) = Taxable Business Profit

By reducing your taxable business profit, you directly lower the amount of income on which you pay Income Tax and Class 4 National Insurance contributions.

Impact on Income Tax and National Insurance

Let's revisit David from a previous example, who had a total AMAP claim of £6,200 for the 2026/27 tax year.

Assume David's gross business income for 2026/27 is £50,000, and he has other allowable expenses totalling £10,000.

Without Mileage Allowance:

• Gross Business Income: £50,000
• Other Allowable Expenses: £10,000
• Taxable Business Profit: £40,000 (£50,000 - £10,000)

With Mileage Allowance:

• Gross Business Income: £50,000
• Other Allowable Expenses: £10,000
• Mileage Allowance: £6,200
• Total Allowable Expenses: £16,200 (£10,000 + £6,200)
• Taxable Business Profit: £33,800 (£50,000 - £16,200)

In this scenario, claiming the mileage allowance reduces David's taxable profit by £6,200. This reduction will directly lower his Income Tax and Class 4 National Insurance contributions. For example, if he is a basic rate taxpayer (20% Income Tax, 6% Class 4 NICs on profits above the lower threshold), this £6,200 reduction could save him approximately £1,612 in tax (£6,200 x (20% + 6%)).

The Overall Self Assessment Process

Your mileage claim is just one component of your overall Self Assessment. The full process involves:

1. Registering for Self Assessment: If you haven't already, you must register by 5 October after the end of the tax year you started self-employment.
2. Gathering Records: Compile all income and expense records for the tax year.
3. Calculating Business Profit: Deduct all allowable expenses (including mileage) from your gross income.
4. Declaring All Income: Include any other income sources (e.g., PAYE salary, rental income, dividends).
5. Calculating Tax and NICs: HMRC's online system or your accountant will calculate your total Income Tax and National Insurance liability based on your declared figures.
6. Filing Your Return: Submit your Self Assessment online by 31 January following the end of the tax year.
7. Paying Your Tax Bill: Pay your tax bill and any Payments on Account by the 31 January and 31 July deadlines.

Accounting software like AccountsOS plays a vital role here. It allows you to track all your income and expenses throughout the year, categorise them correctly, and then generate the necessary reports to complete the self-employment pages of your Self Assessment tax return efficiently and accurately. By automating much of the data entry and calculation, it significantly streamlines the process of integrating your mileage claims into your overall tax submission.

Other Allowable Business Travel Expenses for Sole Traders

While mileage allowance covers the direct costs of using your own vehicle, sole traders often incur a variety of other travel-related expenses that are also allowable for tax purposes. These expenses must also adhere to the 'wholly and exclusively' rule, meaning they are incurred solely for business purposes.

Public Transport Costs

If you use public transport for business journeys, these costs are fully allowable. This includes:

• Train Fares: For business travel between cities or to client meetings.
• Bus and Tram Fares: For local business travel.
• Taxi Fares: For business trips where a taxi is a reasonable and necessary mode of transport.
• Air Travel: Flights for business meetings, conferences, or projects in different parts of the UK or internationally.
• Ferry Costs: For business travel.

Keep all tickets, receipts, or booking confirmations as proof of these expenses.

Accommodation

When business travel requires an overnight stay, the cost of accommodation is an allowable expense. This includes:

• Hotel Stays: Reasonable costs for hotels or guesthouses during business trips.
• Other Lodging: Costs for staying in serviced apartments or similar accommodation for business purposes.

The accommodation must be solely for business travel; personal holidays or extended stays not directly related to a business purpose are not allowable.

Subsistence (Meals and Drinks)

Costs for food and drink (subsistence) can be claimed when you are on a business journey that takes you away from your normal place of work for a significant period or requires an overnight stay.

• Meals on Business Trips: If you are travelling for business and need to purchase a meal that you would not otherwise have bought (e.g., lunch while away from your usual office/home office, or dinner during an overnight stay).
• Reasonable Costs: HMRC expects these costs to be reasonable. Lavish meals or alcoholic drinks are generally not considered allowable.

Important Distinction: You cannot claim for ordinary daily meals or snacks consumed while working at your usual place of business (e.g., buying lunch if you work from a fixed office or your home office). Subsistence is only allowable when you are genuinely travelling for business.

Tolls and Congestion Charges

Any tolls paid on motorways or bridges, as well as congestion charges (e.g., London Congestion Charge, ULEZ), that are incurred specifically for a business journey are allowable expenses.

• Proof of Payment: Keep records of these payments, such as receipts or payment confirmations.

Parking Fees

Parking fees incurred while on a business journey are allowable. This includes:

• Car Park Charges: Payments for parking at client sites, meeting venues, or public car parks during business trips.
• Metered Parking: Costs for street parking while conducting business.

Again, ensure you retain receipts or records of payment.

Vehicle Hire Costs

If you hire a car or van specifically for business purposes, the hire charges are an allowable expense. This could be for:

• Temporary Use: Hiring a vehicle for a specific project or period when your own vehicle is unsuitable or unavailable.
• Specialised Vehicle: Hiring a specific type of van or equipment vehicle needed for a particular job.

Keep the rental agreement and payment receipts. Note that if you hire a vehicle, you would claim the actual hire costs, fuel, and other direct expenses, not AMAPs.

Bicycle Expenses

If you use your bicycle for business travel and choose not to claim the 20p per mile bicycle AMAP rate (which is less common for bicycles), you can claim the actual business proportion of costs such as:

• Repairs and servicing.
• Parts and accessories (e.g., lights, panniers).
• Insurance for the bicycle.

Similar to car expenses, you would need to calculate the business use percentage if the bicycle is also used personally.

Entertaining Clients

It is important to clarify that costs incurred for entertaining clients, suppliers, or other business contacts are generally not an allowable expense for tax purposes in the UK. This includes meals, drinks, or events where the primary purpose is entertainment rather than direct business discussion. While staff entertaining may be allowable under certain conditions, client entertaining is almost always disallowed.

By meticulously tracking and claiming all these legitimate business travel expenses, sole traders can further reduce their taxable profits, ensuring they only pay tax on their true earnings. Accounting software can help you categorise these diverse travel expenses, making it easier to manage your records and prepare for Self Assessment.

Common Mistakes and Best Practices for Mileage Claims

Navigating the rules around mileage and travel expenses can be complex. Sole traders often make common mistakes that can lead to disallowed claims, penalties, or simply missing out on valuable tax relief. Understanding these pitfalls and adopting best practices is essential for accurate and compliant expense management.

Common Mistakes to Avoid

1. Claiming Commuting as Business Travel: This is perhaps the most frequent error. Travel from your home to your regular place of work (even if it is your home office to a client's site you regularly attend) is generally considered ordinary commuting and is not allowable. Business travel must be to a temporary workplace or between distinct business locations.
   • Best Practice: Clearly understand the distinction. If you work from home, travel to a client's premises for a specific project is usually business travel. Travel to a fixed office you attend daily is usually commuting.
2. Inadequate Mileage Records: Relying on estimates or vague notes is a recipe for disaster if HMRC queries your claim.
   • Best Practice: Maintain detailed records for every business journey, including date, start/end locations, purpose, and mileage.
3. Double Counting Expenses: Claiming AMAPs and then also claiming fuel costs, insurance, or repairs for the same vehicle in the same tax year. You must choose one method for a specific vehicle.
   • Best Practice: Decide whether AMAPs or actual costs are more beneficial for each vehicle and stick to that method for the entire tax year (and for the vehicle's lifetime if choosing actual costs).
4. Missing the 10,000-Mile Threshold: Incorrectly applying the 55p rate (from 6 April 2026) to all business miles, even those over 10,000.
   • Best Practice: Always apply the 55p rate to the first 10,000 miles and the 25p rate to any miles beyond that for cars and vans.
5. Claiming Personal Journeys: Including trips for personal errands, holidays, or social visits in your business mileage.
   • Best Practice: Be scrupulously honest. Only claim journeys that are 'wholly and exclusively' for business.
6. Not Optimising the Claim: Failing to compare AMAPs versus actual costs, potentially leaving money on the table.
   • Best Practice: Especially when you acquire a new vehicle or your business mileage changes significantly, perform a comparison to determine which method offers the greatest tax relief.
7. Ignoring Passenger Allowance: Forgetting to claim the additional 5p per mile when carrying a business passenger.
   • Best Practice: Keep a record of when and who you transported for business purposes.
8. Late Record Keeping: Trying to reconstruct a year's worth of mileage at the last minute before the Self Assessment deadline.
   • Best Practice: Log mileage and expenses regularly, ideally after each journey or at least weekly.

Best Practices for Effective Mileage and Travel Expense Management

1. Consistent and Timely Record Keeping:

   • Log Daily/Weekly: Make it a habit to record your mileage and expenses as they occur.
   • Use Technology: Leverage mileage tracking apps or integrated accounting software like AccountsOS. These tools can automate much of the process, reducing manual errors and saving time.
   • Digitalise Receipts: Scan or photograph all receipts for fuel, parking, tolls, public transport, accommodation, and subsistence. Store them digitally for easy access and compliance with MTD ITSA.

2. Regular Review and Optimisation:

   • Annual Comparison: At the start of each tax year, or when you get a new vehicle, compare the potential tax relief from AMAPs versus actual costs. This is particularly important if your vehicle running costs are high or if you purchase a significant asset for your business.
   • Monitor Mileage: Keep an eye on your cumulative business mileage throughout the year to anticipate when you might cross the 10,000-mile threshold for cars and vans.

3. Clear Documentation:

   • Detailed Purpose: Always specify the business purpose of each journey clearly in your records. Generic entries like "meeting" are less robust than "Meeting with Mr. J. Smith at Acme Corp regarding Q3 marketing strategy."
   • Odometer Readings: For actual expenses, periodic odometer readings (e.g., start/end of tax year, start/end of a vehicle's use) are crucial for calculating total mileage and business proportion.

4. Stay Informed:

   • HMRC Guidelines: Regularly check HMRC's official guidance on allowable expenses and mileage rates, as rules can change (as seen with the 2026 update).
   • Professional Advice: If you have complex travel patterns or significant vehicle expenses, consider consulting an accountant or tax advisor for personalised guidance.

By diligently following these best practices, sole traders can confidently claim their legitimate travel expenses, minimise their tax liability, and ensure compliance with HMRC regulations, particularly with the upcoming changes in mileage allowance rates from April 2026.

Making Tax Digital for Income Tax Self Assessment (MTD ITSA) and Mileage

Making Tax Digital for Income Tax Self Assessment (MTD ITSA) represents a fundamental shift in how sole traders and landlords will manage and report their financial information to HMRC. With its phased introduction, understanding how mileage claims fit into this new digital landscape is crucial for preparing your business.

Recap of MTD ITSA

MTD ITSA mandates a more digital and frequent approach to tax reporting. For eligible businesses, it requires:

• Digital Record Keeping: All business income and expenses must be recorded using MTD-compatible software. This means moving away from paper ledgers or non-digital spreadsheets.
• Quarterly Updates: Instead of a single annual tax return, businesses will need to submit summaries of their income and expenses to HMRC every three months (quarterly updates).
• End of Period Statement (EOPS): After the final quarterly update, an EOPS will be submitted to finalise the business's profits and losses for the tax year.
• Final Declaration: This replaces the traditional Self Assessment tax return and includes all other income sources (e.g., employment, savings) and claims for allowances.

Impact on Mileage Claims

For sole traders, MTD ITSA will directly influence how mileage and other travel expenses are tracked and reported:

1. Mandatory Digital Records for Mileage:

   • If you are mandated for MTD ITSA, you will no longer be able to rely solely on paper logbooks or non-digital spreadsheets for your mileage records.
   • Your mileage tracking system must be MTD-compatible, meaning it can either directly integrate with HMRC's MTD system or seamlessly feed into MTD-compatible accounting software.
   • This digital requirement applies whether you claim AMAPs or actual expenses. For AMAPs, the digital record must capture the details of each journey (date, purpose, mileage). For actual expenses, all receipts for fuel, repairs, etc., must be digitally recorded.

2. Inclusion in Quarterly Updates:

   • Your mileage allowance or actual travel expenses will be aggregated and reported as part of your business's expenses in each quarterly update to HMRC.
   • This means you will need to calculate your mileage claim (or actual expenses) at least quarterly, rather than just once a year. This provides a more real-time view of your tax position and encourages more frequent record keeping.

3. Seamless Integration with MTD-Compatible Software:

   • The use of MTD-compatible accounting software becomes essential. Such software allows you to log mileage (often through integrated apps), capture digital receipts for other travel expenses, categorise them correctly, and then generate the required quarterly summaries directly to HMRC.
   • This integration reduces manual data entry, minimises errors, and ensures that your travel expense claims are consistently and accurately reported according to MTD rules.

Timeline for MTD ITSA

The implementation of MTD ITSA is phased:

• April 2026: Mandatory for self-employed individuals and landlords with gross income from all businesses and properties over £50,000.
• April 2027: Mandatory for self-employed individuals and landlords with gross income from all businesses and properties between £30,000 and £50,000.
• A date for those earning under £30,000 is yet to be confirmed, but they can opt in voluntarily.

This means that if your gross self-employment income (before expenses) is above £50,000, you will need to be MTD ITSA compliant from April 2026, coinciding with the new 55p mileage allowance rate.

How AccountsOS Supports MTD ITSA for Expense Tracking

AccountsOS is designed to be MTD ITSA compatible and can significantly simplify the management of your mileage and other travel expenses:

• Digital Expense Capture: Easily upload receipts for fuel, parking, public transport, and accommodation directly into the software using your smartphone or computer.
• Smart Categorisation: AI-powered categorisation helps ensure your expenses, including various travel costs, are correctly allocated according to HMRC's rules.
• Mileage Tracking Integration: While AccountsOS might not have a built-in GPS tracker, it facilitates the recording of mileage claims, allowing you to input your calculated AMAP figures or actual expense details.
• Real-Time Financial Overview: Track your income and expenses throughout the year, providing an up-to-date estimate of your taxable profit and tax liability.
• MTD Reporting: AccountsOS will support the generation and submission of the required quarterly updates, End of Period Statements, and Final Declarations directly to HMRC, ensuring a seamless MTD ITSA experience for your travel expenses and overall business finances.

Preparing for MTD ITSA by adopting digital record-keeping practices now will ensure a smooth transition and help you make the most of the updated mileage allowance rates from 6 April 2026.

The Wider Context: Why the Mileage Allowance Increase Matters

The increase in the Approved Mileage Allowance Payment (AMAP) rate from 45p to 55p per mile for cars and vans, effective from 6 April 2026, is more than just a numerical adjustment. It reflects broader economic realities and government objectives, offering tangible benefits and implications for sole traders across the UK.

Inflationary Pressures on Motoring Costs

One of the primary drivers behind this increase is the recognition of sustained inflationary pressures on vehicle running costs. Over recent years, sole traders have faced rising expenses across the board, including:

• Fuel Prices: Volatile and generally increasing fuel costs significantly impact businesses reliant on road travel.
• Vehicle Maintenance and Repairs: The cost of parts and labour for servicing and repairing vehicles has risen.
• Insurance Premiums: Vehicle insurance has seen consistent increases, adding to the fixed costs of ownership.
• Vehicle Purchase Costs: The price of new and used vehicles has escalated, affecting the capital outlay for businesses.

The previous 45p rate, which had been static for many years, had become less reflective of the true economic burden on sole traders. The 55p rate aims to better compensate self-employed individuals for these unavoidable business costs, ensuring the allowance remains a meaningful form of tax relief.

Government's Aim for 'Simplification, Modernisation, and Fairness'

The increase in the mileage allowance rate aligns with HMRC's stated objectives for the tax system: simplification, modernisation, and fairness.

• Fairness: By adjusting the rate upwards, the government is acknowledging the financial realities faced by mobile sole traders. It ensures that those using their personal vehicles for business are fairly compensated for their expenses, reducing the proportion of their income effectively used to subsidise business travel.
• Simplification (Indirectly): While the rate itself is a figure, a fair and up-to-date rate encourages more sole traders to use the simplified AMAP method rather than the more complex actual expenses method. This, in turn, can simplify their record keeping and Self Assessment process, especially when combined with the move to Making Tax Digital.
• Modernisation: The adjustment helps keep the tax system relevant and responsive to contemporary economic conditions, ensuring allowances do not become outdated.

Financial Relief for Mobile Sole Traders

The most direct and immediate impact of the 55p rate is the financial relief it offers to self-employed individuals. For a sole trader driving 10,000 business miles annually, the increase translates to an additional £1,000 in allowable expenses per year (£5,500 instead of £4,500). This additional expense reduces their taxable profit, leading to lower Income Tax and Class 4 National Insurance contributions.

This relief is particularly significant for:

• Tradespeople: Plumbers, electricians, builders, and other trades who travel extensively between jobs.
• Mobile Service Providers: Hairdressers, beauticians, and therapists who visit clients at their homes.
• Consultants and Freelancers: Who regularly attend client meetings or travel for project work.
• Delivery and Courier Drivers: Self-employed individuals operating in the gig economy.

For these businesses, where vehicle use is integral to their operation, the enhanced allowance can make a tangible difference to their take-home pay and overall business profitability.

Encouragement for Accurate Expense Claims

A more generous mileage allowance can also serve to encourage more sole traders to accurately track and claim their legitimate business travel expenses. When the allowance is perceived as too low, there might be a temptation to either not bother claiming or to estimate, both of which can lead to non-compliance or missed tax relief. A more reflective rate makes the effort of diligent record keeping more worthwhile, promoting greater accuracy in tax returns.

In conclusion, the rise in the mileage allowance rate from 6 April 2026 is a welcome update for sole traders. It addresses the rising costs of motoring, aligns with principles of fairness in taxation, and provides meaningful financial relief, ultimately supporting the self-employed sector in the UK. Understanding and leveraging this change, supported by robust record keeping and appropriate accounting tools, will be key for sole traders in the coming tax years.

Frequently asked questions

What is the new mileage allowance rate for sole traders from April 2026?

From 6 April 2026, UK sole traders can claim 55p per mile for the first 10,000 business miles travelled in their personal cars or vans. This is an increase from the previous rate of 45p per mile.

Does the 55p rate apply to all business miles?

No, the 55p rate applies only to the first 10,000 business miles in a tax year for cars and vans. Any business miles beyond 10,000 for cars and vans will continue to be claimed at a rate of 25p per mile.

Can I claim mileage for my motorcycle or bicycle?

Yes, you can. The Approved Mileage Allowance Payment (AMAP) rates for motorcycles remain at 24p per mile, and for bicycles, they remain at 20p per mile, regardless of the total mileage. These rates are unchanged from 6 April 2026.

What is the passenger allowance?

You can claim an additional 5p per mile for each business passenger you carry on a business journey. This allowance is separate from the vehicle mileage rate and can be claimed on top of it, provided the passenger is also travelling for business purposes.

Do I need to keep records of my mileage?

Yes, meticulous record keeping is a legal requirement. You must keep a log of all business journeys, including dates, start and end locations, purpose of travel, and total mileage, for at least 5 years after the 31 January submission deadline of the relevant tax year.

Can I claim actual fuel costs instead of mileage allowance?

Yes, you have the option to claim the actual business proportion of all vehicle running costs (fuel, insurance, repairs, capital allowances, etc.) instead of the simplified mileage allowance. However, once you choose the actual cost method for a specific vehicle, you cannot switch back to AMAPs for that vehicle in subsequent tax years.

What is considered 'business travel' for mileage claims?

Business travel includes journeys made wholly and exclusively for your trade, such as visiting clients, attending meetings, or collecting supplies. It does not include ordinary commuting from your home to a regular, fixed place of work, or any purely personal journeys.

How will MTD ITSA affect my mileage claims?

From April 2026 (for those with gross income over £50,000), MTD ITSA will require you to keep digital records of your mileage and include these expenses in quarterly updates to HMRC using MTD-compatible software. This mandates a more frequent and digital approach to recording and reporting.

Related guides

• Self Assessment Tax Calculator
• Guide to Allowable Expenses
• Understanding MTD ITSA
• All Tax Deadlines