Business Mileage Explained: What You Can and Cannot Claim

Mileage is one of the most common business expenses, but it is also one of the most misunderstood. Many business owners are unsure whether they can claim petrol, whether every journey must be logged, or how the rules differ if they use a personal car rather than a company vehicle. The good news is that HMRC has clear rules once you know them, and with the right system, mileage claims are simple to manage.

Business Mileage Basics

In simple terms, business mileage is the distance you travel for work purposes in a vehicle. It is a legitimate expense and can reduce your tax bill, but only if it meets HMRC’s definition of business travel.

Understanding this distinction is crucial. HMRC is strict on commuting rules, and claiming incorrectly can trigger penalties. For more clarity on business expenses, you can also read our guide on top tax deductions every self-employed professional should know.

Company Car vs Personal Car

The way you claim expenses depends on whether the car belongs to your company or is your personal vehicle used for work.

If the car is company-owned

You can claim back the actual running costs. This includes:

• Petrol and diesel.
• Insurance.
• Repairs and servicing.
• Vehicle tax.

These are business expenses because the vehicle is an asset of the business.

If the car is personally owned

You cannot claim for petrol directly. Instead, HMRC requires you to use the Approved Mileage Allowance Payments (AMAPs) system. This covers fuel, wear and tear, and running costs with a fixed rate per mile.

At the time of writing, the HMRC mileage rates are:

• 45p per mile for the first 10,000 business miles in a tax year.
• 25p per mile for any additional miles after 10,000.

These rates apply to cars and vans. Different rates exist for motorcycles (24p per mile) and bicycles (20p per mile).

Using AMAPs keeps things simple. Instead of tracking every fuel receipt or garage bill, you only need to multiply your business miles by the correct HMRC rate.

Why Accurate Mileage Records Matter

HMRC requires detailed records to back up any mileage claim. If you are ever audited and cannot produce evidence, your claim could be rejected, and you may face backdated tax and penalties.

Your mileage log should include:

• The date of each journey.
• The start and end location.
• The purpose of the trip.
• The number of business miles.

If you only use your car occasionally for work, records are straightforward. If you use it regularly, keeping everything accurate is vital.HMRC guidance is clear on what qualifies. You can check their official page on mileage rules for tax relief.

How to Track Mileage Easily

Tracking mileage has become much simpler in recent years. You have two main options:

Spreadsheets

A simple Excel or Google Sheet can be enough. Create columns for the date, journey details, miles, and purpose. As long as you update it consistently, this is an HMRC-compliant record.

Mileage Tracking Apps

Apps like MileIQ or Tripcatcher run in the background on your phone. They automatically record journeys, and you can swipe to classify each trip as business or personal. Reports can be generated instantly, saving hours of admin and reducing the risk of forgetting journeys.

For frequent business drivers, an app is often the most reliable way to stay compliant.

What You Can and Cannot Claim

It is easy to make mistakes when claiming mileage. Here is a breakdown:

You Can Claim For:

• Journeys made purely for business (client visits, deliveries, meetings).
• Travel to temporary workplaces.
• Mileage using your personal car, calculated at HMRC’s approved rates.
• Parking fees and tolls incurred during business journeys.

You Cannot Claim For:

• Normal commuting between your home and permanent workplace.
• Personal travel unrelated to your business.
• Parking fines or penalties.
• Fuel costs directly (if using a personal car – use mileage allowance instead).

Many small businesses lose money by not claiming what they are entitled to. Equally, others risk penalties by incorrectly claiming commuting costs. If you are unsure, working with a bookkeeper ensures your claims are accurate.

Common Mistakes to Avoid

Mileage claims are simple once you understand the rules, but errors are still common. Here are the pitfalls to watch out for:

• Claiming for commuting: Daily travel to your office or permanent site does not qualify.
• Poor record-keeping: HMRC may disallow claims without clear logs.
• Using the wrong rate: Always apply the correct HMRC mileage allowance for the tax year.
• Mixing personal and business travel: Only the business portion of a journey can be claimed.

For more tips on avoiding mistakes, see our guide on how to prepare for tax season without stress.

Conclusion

Mileage is one of the simplest and most valuable business expenses you can claim, but it must be done correctly. The key is knowing whether you are using a personal or company car, applying the correct HMRC rates, and keeping accurate records.

At Hill Bookkeepers, we help businesses manage mileage claims alongside other expenses, so you stay compliant while maximising deductions. If you would like advice tailored to your business, contact us today and we will help you put the right system in place.

Frequently Asked Questions

What is the mileage allowance rate for 2025?

Currently, HMRC allows 45p per mile for the first 10,000 miles and 25p per mile thereafter. Rates are different for motorcycles (24p) and bicycles (20p).

Can I claim petrol instead of mileage allowance?

Not if you use your personal car. HMRC requires you to use mileage allowance payments. Company-owned cars can claim actual fuel costs.

Do self-employed workers follow the same mileage rules?

Yes. Self-employed professionals can claim mileage using HMRC’s approved rates or actual expenses if using a company-owned vehicle.

How do I record mileage for HMRC?

Keep a log with dates, journey details, miles travelled, and the purpose. This can be a spreadsheet or an app.

Can I use an app to track mileage?

Yes. Apps like MileIQ are HMRC-compliant and make reporting much easier.

Can I backdate mileage claims?

Yes, if you have accurate records. Without records, claims may be disallowed.