Sole traders and partnerships made up only of individuals can deduct a flat amount for every business mile driven instead of the actual costs of buying and running a car, van or motorcycle. For the 2026 to 2027 tax year the rate for cars and goods vehicles is 55p a mile for the first 10,000 business miles and 25p after that, up from 45p for earlier years, and motorcycles get 24p a mile. The rate replaces fuel, insurance, servicing, depreciation and every other running cost, and once you use it for a vehicle you must keep using it for as long as that vehicle is in the business.

What are the flat mileage rates for 2026 to 2027?

The rates are set by section 94F of the Income Tax (Trading and Other Income) Act 2005 (ITTOIA 2005). Section 2 of the Taxation (Energy and Vehicles) Act 2026 replaced the old 45p figure with 55p for the 2026 to 2027 tax year and later years. The 25p rate above 10,000 miles and the 24p motorcycle rate did not change.

Vehicle 2026 to 2027 onwards Up to 2025 to 2026
Cars and goods vehicles, first 10,000 business miles 55p 45p
Cars and goods vehicles, miles above 10,000 25p 25p
Motorcycles, all business miles 24p 24p

HMRC’s Business Income Manual at BIM75005 confirms that the number of people in the vehicle does not change the rate. The same Act also raised the approved mileage rate for employees to 55p, but that is a separate regime with its own rules, covered in our page on approved mileage allowance payments.

Who can use the flat rate?

The flat rate is one of the three simplified expenses in Chapter 5A of Part 2 ITTOIA 2005, alongside working from home and living at business premises (see our overview of simplified expenses). HMRC’s guidance at BIM75001 says it can be used by:

  • sole traders, including professionals such as consultants and therapists, because section 94B applies the Chapter to professions and vocations;
  • partnerships in which every partner is an individual.

Section 94C shuts out any partnership that had a company or other non individual partner at any time in the period, and limited companies cannot use simplified expenses at all. There is no turnover limit, and the method can be used whether the business uses the cash basis or traditional accounting. The one exception is the £1,000 trading allowance: GOV.UK says you cannot claim expenses if you use it, so mileage and the allowance cannot be combined. See our page on the trading allowance.

Which vehicles qualify, and which are shut out?

Section 94D covers a car, motorcycle or goods vehicle used for the trade. Section 94G defines a car by exclusion: it is not a goods vehicle, a motorcycle, an invalid carriage or a vehicle of a type not commonly used as a private vehicle and unsuitable to be so used. GOV.UK gives black cabs, hackney carriages and dual control driving instructors’ cars as examples of cars designed for commercial use that cannot use the flat rate. Vans count as goods vehicles and can.

Section 94E then excludes a vehicle in two situations:

  • Condition A: you have at any time claimed capital allowances on the cost of providing the vehicle. HMRC explains at BIM75005 that this is because the mileage rate already contains an element for depreciation.
  • Condition B: the vehicle is a van or motorcycle and any of its purchase cost has been deducted as an expense under the cash basis. Cars are treated differently under the cash basis because their cost goes through capital allowances, so condition A does the work for cars.

What does the rate cover, and what can you claim on top?

Section 94D(6) says the flat rate replaces all expenditure on the acquisition, ownership, hire, leasing or use of the vehicle. BIM75005 lists fuel, oil, servicing, repairs, insurance, vehicle excise duty, MOT and depreciation. None of these can be claimed separately for that vehicle, and section 94D(4)(a) says no other deduction is allowed for them in any period.

What sits outside the rate is incidental expenditure on a particular journey. HMRC gives tolls, congestion charges and parking fees as examples, and GOV.UK confirms you can also claim other travel such as train fares on top. Fines and penalty charges are never allowable.

Which journeys count as business miles?

Section 94F(5) defines a business journey as a journey, or an identifiable part or proportion of one, made wholly and exclusively for the purposes of the trade. Only miles you drive count: section 94F(1) excludes miles made as a passenger. HMRC stresses at BIM75005 that private journeys, including travel from home to work, do not qualify. Whether a trip from home is business travel depends on where your base of operations is, which is explained in our page on travel expenses for the self employed.

A journey that serves a private purpose as well as a business one does not qualify as a whole, but if a separate leg is purely for business, such as a detour to a client on the way to a family visit, the extra business miles can be counted.

How does the 10,000 mile band work?

Section 94F(3) says that where the total miles of relevant business journeys in the period exceed 10,000, the 55p rate is available on only 10,000 of them. Section 94F(4) defines relevant business journeys as journeys by any car or goods vehicle used in the trade for which the flat rate applies. The band is therefore applied to the business as a whole, not separately to each car or van. A business that runs two vans on the flat rate does not get two 10,000 mile bands. Motorcycles sit outside the band at 24p for every mile.

Illustration only. A self employed electrician drives 13,000 business miles in the 2026 to 2027 tax year in a van on the flat rate and also pays £180 in parking at customer sites. The deduction is:

  • 10,000 miles at 55p = £5,500
  • 3,000 miles at 25p = £750
  • parking, claimed separately = £180
  • total = £6,430

Nothing is claimed for the van’s fuel, insurance, servicing or road tax, and no capital allowances are claimed on it.

What if your accounting year straddles 6 April 2026?

Many sole traders still draw up accounts to a date other than 5 April and apportion profits to tax years. HMRC’s guidance at BIM75005 says the deduction for a period of account must be worked out using the mileage rates for the tax year being calculated, before the profit is apportioned. Its example takes a year ending 31 December 2026 with 12,000 business miles: for the 2025 to 2026 computation the deduction is £5,000 (10,000 at 45p plus 2,000 at 25p), and for the 2026 to 2027 computation it is £6,000 (10,000 at 55p plus 2,000 at 25p). In practice this means preparing the vehicle figure twice for that transitional period rather than splitting the miles by date.

What records should you keep?

The claim stands or falls on the mileage figure, so HMRC says at BIM75005 that a contemporaneous record of business mileage is important. A useful log shows the date, start and end points, purpose and miles for each business trip, ideally backed by opening and closing odometer readings for the year. GOV.UK says self employed records must be kept for at least 5 years after the 31 January submission deadline for the tax year. If HMRC opens an enquiry, a mileage figure that is a round number, or one that implies the vehicle is never used privately, is an obvious place to start.

What mistakes come up most often?

  • Claiming the mileage rate and also putting fuel, insurance or repairs for the same vehicle through the accounts.
  • Switching a vehicle to the flat rate after capital allowances have been claimed on it. Condition A in section 94E applies if allowances were claimed at any time.
  • Applying a separate 10,000 mile band to each vehicle.
  • Counting the regular journey between home and a fixed place of work.
  • Using the 55p rate for the whole of an accounting period that began before 6 April 2026 without following HMRC’s transitional method.
  • Trying to use it inside a limited company, which HMRC’s guidance at BIM75001 rules out.

Whether the flat rate actually gives the better result depends on the vehicle and the mileage. Our page on choosing between the mileage rate or actual car costs works through that decision.

If HMRC opens a check into your return, tax investigation insurance pays your accountant’s fees. Solar Protect cover pays up to £100,000 with no excess; it never pays tax, interest or penalties. Read how our cover works or get a quote.

Related Accountapedia entries

Sources

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.