Sole trader mileage allowance 2026/27: the new 55p rate

3 days ago

6 min read

The sole trader mileage allowance for 2026/27 is 55p per business mile for the first 10,000 qualifying miles in a car or goods vehicle, then 25p per mile. The higher first-band rate replaces 45p from 6 April 2026. If you use simplified expenses, check that your mileage calculation reflects the correct tax year.

That headline does not mean HMRC pays you 55p for every mile you drive. It is a way to calculate a business expense, subject to eligibility and journey rules. This guide explains the calculation, the records worth keeping and the checks to make before including mileage in your sole trader accounts.

What changed for 2026/27?

For cars and goods vehicles, including vans, the first 10,000 business miles attract a 55p rate in 2026/27. The rate above that threshold remains 25p. Motorcycles have a separate 24p rate. Before 6 April 2026, the first-band car and goods-vehicle rate was 45p. See HMRC's current simplified vehicle expenses rates.

Keep the year clearly labelled in your spreadsheet or bookkeeping notes. A 2025/26 tax return and your ongoing 2026/27 records can be on your desk at the same time, but they do not use the same first-band rate. Do not overwrite an older year's calculation simply because you have updated your current template.

Who can use simplified mileage expenses?

This method is available to sole traders and partnerships without a company as a partner. Limited companies cannot use the self-employed simplified-expenses scheme. A director claiming mileage through a company should use the relevant employment rules instead. HMRC's simplified expenses overview explains the distinction.

Check the vehicle's history before choosing the method. You cannot use mileage rates for a vehicle if you have already claimed capital allowances on it or deducted its purchase cost as a business expense. Some commercially designed cars, such as black cabs and dual-control driving instructors' cars, are excluded.

Find the original purchase paperwork and previous accounts rather than guessing what was claimed. If another accountant prepared those accounts, ask for the vehicle treatment. The answer can determine which calculation is available now, even when the vehicle has been used privately as well as for work.

The method is optional, but choosing it has consequences: once adopted for a vehicle, it must continue while that vehicle remains in the business. It is not an annual opportunity to switch to whichever method produces the largest deduction.

A worked example: 13,600 business miles

Assume an eligible sole trader uses one car and records 13,600 qualifying business miles during 2026/27. Using the published rates:

First 10,000 miles × £0.55 = £5,500.
Remaining 3,600 miles × £0.25 = £900.
Total simplified mileage expense = £6,400.

Applying 55p to all 13,600 miles would give £7,480, overstating the expense by £1,080. A running annual total helps you identify when to move into the second band; the first 10,000-mile allowance does not restart each month.

If the trader's profit before this mileage expense were £36,400, the deduction would reduce that figure to £30,000, before any other relevant adjustments. It would not create a £6,400 refund. The actual tax effect depends on the person's wider income and tax position. HMRC's business expenses guidance explains how allowable expenses reduce taxable profit.

This example is illustrative. It assumes all recorded miles qualify and the vehicle is eligible; multiplying a mileage total correctly cannot fix a claim that includes private travel.

Which journeys count as business mileage?

Start with the purpose of each journey. Travel between customers or from business premises to collect supplies may qualify when undertaken wholly for the trade. Private trips do not. A journey is not automatically business travel because it happens on a working day or because you answer a client call during it.

Ordinary travel between home and a regular workplace is generally excluded. For example, driving from home to your usual shop should not be treated as business mileage simply because you own the shop. HMRC lists non-business travel, home-to-work travel and fines among the exclusions in its car, van and travel expenses guidance.

Home-based and travelling businesses need more careful consideration. Keeping invoices or tools at home does not automatically make every journey from home allowable. The nature of the trade, how it operates and the purpose of the travel matter. HMRC's guidance on home-to-work journeys explains why apparently similar arrangements can receive different treatment.

If you work across changing sites, provide your accountant with the actual pattern: where you work, how regularly you attend and what each journey achieves. For mixed trips, flag the private element and identify any genuinely separate business leg. Avoid labelling the whole route “business” just because it includes a short work-related stop.

Do not claim fuel and mileage for the same vehicle

The simplified rate already covers vehicle acquisition and running costs, including fuel, servicing, repairs, insurance, vehicle tax and MOT costs. Adding those expenses again would duplicate the deduction. Nor should you combine the mileage calculation with capital allowances for that vehicle. The detailed rules are in HMRC's motor vehicle expenses manual.

This matters when bank feeds automatically import fuel purchases. A payment appearing in your accounting software does not establish that it belongs in deductible motor expenses. Tell your bookkeeper which method applies to each vehicle so imported transactions and the mileage calculation are handled consistently.

Separate costs attached to a qualifying business journey, such as parking fees, tolls and congestion charges, can still be allowable. Keep evidence and the business purpose. A parking fine is different from a parking fee: fines do not become deductible because you were working. HMRC's guidance for self-employed drivers covers these additional costs and exclusions.

Build a mileage log you can explain later

A useful log should let someone understand the journey without relying on your memory. We recommend recording:

The date and vehicle used.
The starting point and destination.
The customer, supplier or specific business reason.
The qualifying business miles.
Any private detour or excluded part of the journey.
A reference to supporting appointments, invoices or parking receipts.

For example, an entry might describe a journey from business premises in Bromley to a customer's London office for an installation, followed by the measured business distance. “Work travel — 70 miles” is harder to explain months later. Use a consistent distance-recording method and investigate unusual entries before they accumulate.

Make a short weekly check against your diary. Look for missing return journeys, duplicates and days when an automatically tracked trip was actually personal. If you use an app, review its classifications; an automatic “business” label is not a tax decision.

Export or back up the log regularly. Keep it with the expense calculation and relevant supporting evidence. HMRC requires accurate business records that identify business transactions and can support the figures in your return.

Records normally need to be retained for at least five years after the relevant 31 January submission deadline. Check HMRC's record retention guidance for the rules, including very late returns. Changing software or replacing your phone should not mean losing the evidence behind earlier claims.

Compare methods before committing to a new vehicle

Simplified mileage reduces the calculation work, but it is not necessarily the best option for every eligible vehicle. An actual-cost approach considers the allowable business share of running costs and the appropriate treatment of the vehicle itself. Compare the alternatives before making the first claim.

For that discussion, gather the purchase or lease agreement, expected annual business and private mileage, running-cost estimates and any previous tax treatment. A high-mileage vehicle and one used occasionally for business can produce quite different comparisons. Ask for a calculation based on your circumstances rather than relying on a general claim that one method always saves more tax.

If you use the £1,000 trading allowance instead of deducting business expenses, you cannot add mileage expenses on top. Also flag an accounting year that does not match the tax year: HMRC's vehicle manual contains specific guidance on calculating profits across years with different mileage rates.

Your practical 2026/27 mileage check

Before the next bookkeeping handover, check the following:

The worksheet clearly identifies the tax year.
The vehicle is eligible and its previous tax treatment is confirmed.
The mileage log separates qualifying business journeys from private travel.
The calculation applies 55p to the first 10,000 business miles and 25p thereafter.
Fuel and other covered running costs have not been deducted again.
Additional journey costs have receipts and a business explanation.
The final total agrees with the figure used in the accounts.

Give your accountant the underlying log as well as the total. Add a short note about any vehicle change, unusual travel pattern or missing evidence. That makes it easier to resolve questions before the tax return is prepared.

Sole trader accounting support in Bromley, London and across the UK

Mysimplytax supports sole traders with bookkeeping, allowable expenses, Self Assessment and Making Tax Digital. Our sole trader accounting service can help bring your mileage records and wider business expenses into an organised accounting process.

Whether you need local accounting support in Bromley, work across London or run your business elsewhere in the UK, contact Mysimplytax to discuss your records and the help you need. Have your existing mileage log and previous vehicle claims available so the discussion starts with the right facts.

General information checked against HMRC guidance on 19 October 2026. The examples are illustrative; the treatment of your journeys and vehicle depends on your circumstances.