Sole Trader Mileage Expenses Explained (2026 Update)

For the first time in fifteen years, HMRC has actually raised its mileage rate. From 6 April 2026, the flat rate for business mileage climbed from 45p to 55p a mile, the first increase since 2011. Fifteen years! Fuel prices, insurance, and general running costs have all moved considerably in that time, while the rate sole traders could claim stayed frozen the entire way through. It's a genuinely welcome change, and one that's worth understanding properly, because getting your mileage claim right is one of the most direct, straightforward ways to reduce your tax bill if you drive for business.

We work with a considerable number of sole traders and contractors across Kent whose business genuinely lives on the road: a mobile physiotherapist visiting patients across Ashford and Canterbury, an electrician covering sites from Folkestone to Maidstone, a driving instructor logging hundreds of miles a month around the county. For every single one of them, mileage is one of the largest, and most commonly misunderstood, expense categories in their entire business. So let's explain it properly, from the two methods available, to what genuinely counts as business mileage, to the specific mistakes we see most often.

The Two Methods: Flat Rate or Actual Costs

There are two entirely different ways to claim vehicle costs as a sole trader, and understanding the distinction between them is the foundation of everything else in this guide.

The flat rate mileage method, part of HMRC's simplified expenses scheme, lets you claim a fixed amount per business mile driven, covering fuel, insurance, servicing, repairs, and general wear and tear all within a single figure. You don't need to track any of these individual costs separately; you simply log your business miles and apply the relevant rate.

The actual cost method involves calculating your genuine vehicle running costs, fuel, insurance, servicing, repairs, and a capital allowance for the vehicle's value, then apportioning them based on the percentage of your overall mileage that was for business purposes. This requires considerably more detailed record-keeping, but for some vehicles, particularly higher-value ones, it can produce a larger claim.

Here's the crucial rule most people don't realise until it's too late: once you choose a method for a particular vehicle, you must generally stick with that method for as long as you use that vehicle in the business. You can't switch between flat rate and actual costs year to year for the same car, so it's worth thinking this through properly before your first claim, rather than defaulting to whichever feels easier in the moment.

The Current Flat Rates, in Full

For cars and vans, the flat rate is 55p per mile for the first 10,000 business miles in a tax year, dropping to 25p per mile for any business mileage beyond that threshold. This threshold resets every tax year; it isn't a lifetime limit, and it isn't tied to the vehicle itself, but to your total business mileage across the year.

Motorcycles are claimed at a flat 24p per mile, with no reduction after any particular threshold. Bicycles are claimed at 20p per mile, a genuinely useful rate for anyone doing local business travel by bike across a town like Folkestone or Canterbury, where a bicycle is often a perfectly practical way to reach nearby clients. And if you're a sole trader who occasionally carries a business passenger, a colleague, a fellow contractor sharing a job, you can claim an additional 5p per mile per passenger, on top of your standard rate, provided the journey and the passenger both genuinely relate to the business.

A Worked Example Across a Full Year

Let's make this concrete. Say you're an electrician covering jobs across Folkestone, Dover, and occasionally further afield toward Ashford, and you drive 14,000 business miles over the course of the 2026/27 tax year. Your first 10,000 miles are claimed at 55p, giving £5,500. The remaining 4,000 miles are claimed at 25p, giving £1,000. Your total mileage claim for the year comes to £6,500, deducted directly from your taxable profit, without needing to keep a single fuel receipt or insurance statement to support it.

Compare that to the previous rate: under the old 45p and 25p structure, the same 14,000 miles would have produced a claim of £5,500 (10,000 at 45p, plus 4,000 at 25p equals £4,500 plus £1,000). The rate increase alone is worth an additional £1,000 in this example, purely from the same driving pattern as the year before. If you were still claiming at the old rate after April 2026, either through habit or because your software hadn't been updated, you're due the shortfall back.

What Actually Counts as Business Mileage

This is where genuine confusion creeps in, so it deserves careful explanation. Ordinary commuting, travel from your home to a single, regular, fixed place of work, generally doesn't count as business mileage, mirroring the same rule that applies to employees. If you have a single business premises you travel to every day, that daily journey isn't claimable.

But most sole traders, particularly tradespeople and mobile service providers, don't have a single fixed workplace in that sense. If you're travelling from home directly to a client's premises, between multiple sites in a single day, or to collect materials and supplies, that mileage genuinely counts as business travel. A plumber based in Hythe, travelling each morning to a different customer's home, is claiming entirely legitimate business mileage for every one of those journeys, because he doesn't have a fixed, regular workplace he's commuting to in the traditional sense.

Where it gets more nuanced is if you do have a base you regularly work from, a workshop, an office, a specific site you're posted to for an extended period. HMRC applies a general principle around "temporary workplaces": if you're working at a particular location for what's expected to be, and turns out to be, less than twenty-four months, travel there is typically treated as business mileage. If a site becomes effectively your permanent, ongoing workplace, travel to it increasingly resembles ordinary commuting rather than business travel.

A contractor client of ours near Ashford was initially unsure whether his daily drive to a long-running renovation project, expected to last around a year, counted as business mileage. Because the engagement was genuinely temporary and expected to last under twenty-four months, it did. If that same project had stretched on for several years and effectively became his fixed base of work, the answer would likely have shifted.

The Actual Cost Method: When It Genuinely Makes Sense

The flat rate method suits the majority of sole traders, particularly those driving more modest, lower-value vehicles, simply because it's straightforward and the resulting claim tends to compare favourably against genuine running costs. But it isn't automatically the better choice for everyone.

If you drive a higher-value vehicle, a newer van with significant finance costs, or a car with unusually high running costs, calculating actual expenses, fuel, insurance, servicing, repairs, and capital allowances on the vehicle's value, apportioned by genuine business use percentage, can sometimes produce a larger claim. This requires properly tracking every relevant cost throughout the year and calculating an honest, defensible business-use percentage based on your total mileage, business versus personal.

A builder's merchant client of ours near Ashford, running two more substantial vans with meaningful finance and running costs, found that actual costs produced a noticeably larger claim than the flat rate would have. It took more careful record-keeping throughout the year, but the difference was genuinely worth the extra effort for his specific situation. We'd generally recommend running the comparison properly with your accountant before committing to a method, rather than guessing which will work out better.

You Cannot Mix and Match

A common and costly mistake is attempting to claim actual fuel receipts alongside the flat mileage rate for the same vehicle. You cannot do both. The flat rate is specifically designed to cover fuel, insurance, servicing, and wear and tear all within that single per-mile figure; claiming actual fuel costs on top would mean double-claiming the same underlying expense, which HMRC will not permit and which can trigger a genuinely uncomfortable enquiry if discovered.

If you've chosen the flat rate method for a vehicle, keep your mileage log accurate and complete, and resist the temptation to also submit fuel receipts as a separate expense. If you've chosen actual costs instead, don't also apply a flat mileage rate on top.

What You Can Still Claim Separately, Alongside Mileage

Here's a detail that genuinely surprises people: certain costs remain claimable in addition to your mileage rate, even under the flat rate method, because they're not the kind of ongoing running cost the mileage rate is designed to cover. Parking fees for business trips, tolls including the Dartford Crossing's Dart Charge, and congestion charges incurred on genuine business journeys are all claimable on top of your mileage claim, not folded into it.

A delivery driver client of ours regularly crossing the Dartford Crossing for supplier collections had assumed, reasonably enough, that his mileage rate already covered this. It doesn't; the toll is a separate, additional claim, and once we clarified this, it added a genuinely worthwhile sum to his annual expense claim that he'd been quietly absorbing himself for over a year.

Keeping a Proper Mileage Log

Whichever method you use, HMRC expects you to keep a genuine, contemporaneous record of your business mileage, not a rough estimate reconstructed months later. A proper log records the date of each journey, the starting point and destination, the purpose of the trip, and the mileage covered.

We strongly recommend using a mileage tracking app rather than a paper notebook or a vague end-of-year guess, simply because accuracy compounds enormously over a full year of driving. A driving instructor client of ours switched from an occasional handwritten note to an app that logs journeys automatically via his phone's GPS; his claimed mileage increased by nearly 15% in the following year, not because he was suddenly driving more, but because he'd previously been forgetting to log a meaningful number of genuine business trips.

Multiple Vehicles: You Can Choose Differently for Each

If your business uses more than one vehicle, perhaps a van for materials and a smaller car for client visits, you're not locked into using the same method across both. You can use the flat rate for one vehicle and actual costs for another, provided you apply the chosen method consistently for each individual vehicle going forward, rather than switching a specific vehicle between methods year to year.

A Genuinely Common Mistake: Forgetting the 10,000 Mile Threshold Resets Annually

Some sole traders assume the 10,000 mile threshold, above which the rate drops to 25p, is a lifetime limit tied to a specific vehicle. It isn't. It resets every single tax year, based on your total business mileage across that year, regardless of which vehicle covered those miles if you've used more than one. Keeping this clearly in mind matters particularly for higher-mileage businesses, where the drop from 55p to 25p partway through the year has a genuine impact on your overall claim, and it's worth tracking your cumulative mileage through the year so you know roughly where you stand.

VAT Considerations, Briefly

If you're VAT registered and use the flat mileage rate, there's a further detail worth knowing: you can potentially reclaim the VAT element on the fuel portion of your mileage claim, using HMRC's published advisory fuel rates for the fuel element, provided you keep valid VAT receipts for fuel purchases covering at least the equivalent value. This is a genuinely underused relief among VAT-registered sole traders, and it's worth a specific conversation with us if this applies to your business, since the calculation involves a slightly different set of figures from the core mileage rate itself.

Cross-Channel and Ferry Travel: A Kent-Specific Consideration

Given our location, this is worth a direct mention. If your business genuinely requires travel via the Eurotunnel or a ferry crossing for work purposes, transporting equipment to a client site across the water, for instance, those crossing costs are a separate, allowable business expense, distinct from and additional to your mileage claim for the road portion of the journey. It's a relatively niche scenario for most sole traders, but for those involved in cross-Channel trade or service work, it's worth keeping properly documented alongside your standard mileage records.

Putting This Into Practice

Pulling all of this together into something genuinely actionable: choose your method deliberately for each vehicle, rather than defaulting without thinking it through, and keep in mind you generally can't switch later. Keep a proper, contemporaneous mileage log, ideally through an app rather than a rough end-of-year guess. Remember that parking, tolls, and the Dartford Crossing charge are claimable separately, on top of your mileage rate, not folded into it. And if your business has crossed, or is approaching, the 10,000 mile threshold, keep a rough running total through the year so the rate change partway through doesn't catch you by surprise.

How We Help Sole Traders Get This Right

As a two-partner practice based in Folkestone, we review every client's vehicle costs properly, checking whether the flat rate or actual costs genuinely suits their specific situation, rather than assuming one approach fits everyone. For clients doing substantial mileage across Kent, this is often one of the single largest expense categories in their entire business, and getting it right, both the method chosen and the accuracy of what's actually logged, makes a genuinely meaningful difference to the final tax bill.

If you're a sole trader or contractor across Folkestone, Dover, Canterbury, Ashford, or Deal, and you're not confident your mileage is being claimed properly, or you've not yet reviewed whether the new 55p rate has been correctly applied since April, get in touch with us at Cannon Accountants. We'll review your specific situation and make sure you're claiming exactly what you're entitled to.

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Frequently Asked Questions

Can I claim mileage for driving to networking events or trade shows?

Yes, genuine business-related travel to networking events, trade shows, or supplier visits counts as business mileage, provided the purpose is clearly business-related rather than incidental to a personal trip.

What happens if I use my vehicle for both business and personal driving?

This is entirely normal and doesn't complicate the flat rate method at all; you simply log and claim only the genuine business miles driven, leaving personal mileage entirely out of the calculation. Under the actual cost method, you'd calculate your overall running costs and then apportion them by your business-use percentage instead.

Do I need to keep fuel receipts if I'm using the flat mileage rate?

Not for the purposes of your Income Tax expense claim itself, since the flat rate already covers fuel within the single per-mile figure. If you're VAT registered and reclaiming the VAT element on fuel specifically, you will need valid fuel receipts to support that separate claim.

Can I claim mileage for a vehicle I lease rather than own outright?

Yes, the flat rate mileage method applies equally to leased vehicles. If you're considering the actual cost method instead, lease payments are generally treated differently from a vehicle you own outright, so it's worth discussing your specific finance arrangement directly with us to calculate the claim correctly.