HMRC Mileage Rates 2026/27: What Self-Employed Drivers Need to Know
The new tax year is just weeks away. Here's what's staying the same, what catches people out, and how to make sure you're not leaving money on the table.
If you're self-employed and you drive for work, you're probably claiming mileage. But if you're anything like most sole traders, you're probably not claiming it correctly.
The 2026/27 tax year starts on 6 April. If you drive for work, now is a good time to make sure you understand the rules, because they're easy to get wrong.
The rates for 2026/27
HMRC's Approved Mileage Allowance Payments (AMAPs) for the new tax year are:
- Cars and vans: 45p per mile for the first 10,000 business miles, then 25p per mile after that
- Motorcycles: 24p per mile (all miles)
- Bicycles: 20p per mile (all miles)
There's also a passenger rate of 5p per mile per passenger. If a colleague travels with you for business purposes (say, you're both going to the same client meeting), you can claim an extra 5p per mile for each passenger. Two passengers on a 50-mile trip adds £5.00 to your claim. It's not a lot, but it adds up if you regularly travel with others.
If these rates look familiar, that's because they haven't changed since 2011. Despite fuel costs rising significantly over the past 15 years, HMRC hasn't updated them. The 45p rate was set when petrol was around £1.30 per litre. It's been above £1.40 for most of the last few years. The AA, RAC, and Federation of Small Businesses have all called for increases, but successive governments have left the rates frozen.
For context, the AA estimates that the actual cost of running a medium-sized car in 2026 is between 50p and 70p per mile when you include fuel, insurance, road tax, depreciation, and maintenance. That means the 45p rate doesn't fully cover actual costs for many drivers, but it's still a valuable flat-rate deduction that requires no receipts and no complicated calculations.
Don't let the "no change" headline fool you. Just because the rates haven't moved doesn't mean your claim should stay the same. If you've been undertracking miles (or not tracking at all), you could be missing out on hundreds of pounds a year.
A brief history of the rates
The current 45p/25p structure was introduced in April 2011, replacing the previous tiered system. Before that, HMRC used engine-size-based rates: one rate for cars up to 1400cc, another for 1401–2000cc, and a third for larger engines. The 2011 simplification was welcomed, but the freeze since then has been controversial.
In 2011, the average UK petrol price was £1.33 per litre. By 2022 it hit £1.91. Even after falling back, fuel remains significantly more expensive than when the rate was set. Motoring organisations have argued the rate should be at least 50p, and some have pushed for 60p. HMRC has shown no sign of changing it. If anything, the direction of policy is towards electric vehicles, where the economics are very different (more on that below).
Electric vehicles: the same 45p rate, much lower costs
Here's something that catches people by surprise: electric vehicles qualify for the same 45p/25p mileage rates as petrol and diesel cars. HMRC confirmed this in their AMAP guidance. There's no separate rate for EVs.
This creates a significant financial advantage. The electricity cost to drive an EV is roughly 4–6p per mile (depending on your tariff and whether you charge at home or use public chargers). Compare that to 15–20p per mile for petrol. When you claim 45p per mile but your actual fuel cost is 5p, you're effectively pocketing the difference as a tax-free allowance that covers depreciation, insurance, and maintenance, with a much wider margin than petrol drivers get.
For a self-employed electrician doing 10,000 business miles in an EV, the mileage claim is £4,500. The actual electricity cost is roughly £500–£600. That's a £3,900 tax-free benefit, compared to roughly £2,500–£3,000 for a petrol driver claiming the same miles. One of the strongest financial arguments for going electric if you're self-employed and drive for work.
Advisory fuel rates: how they compare
You might have seen "advisory fuel rates" mentioned. These are different from AMAPs. Advisory fuel rates are published quarterly by HMRC and are used by employers to reimburse employees for business travel in company cars. They're based on actual fuel costs and engine size.
As of early 2026, advisory fuel rates for petrol cars range from 13p per mile (up to 1400cc) to 23p per mile (over 2000cc). Diesel ranges from 12p to 18p. Electric vehicles have an advisory rate of 7p per mile.
These rates are not relevant to the self-employed. If you're a sole trader claiming mileage on your SA103, you use the 45p/25p AMAP rates, not advisory fuel rates. Advisory rates only matter if you're an employee using a company car, or if an employer is reimbursing you. The distinction matters because advisory rates are much lower than AMAPs, and occasionally people confuse the two and underclaim.
Simplified mileage vs actual cost method
HMRC gives you two options for claiming vehicle expenses. You must choose one and stick with it for that vehicle:
| Simplified Mileage (AMAP) | Actual Cost Method | |
|---|---|---|
| How it works | Claim 45p/25p per business mile. No receipts needed for fuel. | Claim actual costs: fuel, insurance, road tax, MOT, repairs, depreciation. Apply a business-use percentage. |
| Records needed | Mileage log (date, destination, purpose, miles) | All vehicle receipts + mileage log to calculate business percentage |
| Best for | Lower-mileage drivers, older/cheaper vehicles, people who want simplicity | High-mileage drivers with expensive vehicles, especially if fuel costs are high |
| Downsides | May not cover actual costs for expensive vehicles or high-mileage drivers (especially above 10,000 miles when rate drops to 25p) | Much more paperwork. Must keep every receipt. Complex calculations. |
| Can you switch? | You can only use simplified mileage for vehicles you haven't previously claimed actual costs for. Once you choose actual costs for a vehicle, you can't switch back to simplified for that vehicle. | |
For most self-employed people, simplified mileage is the better choice. It's dramatically less paperwork, the rates are generous for lower-mileage drivers, and you don't need to keep fuel receipts. The actual cost method can produce a higher claim if you drive an expensive vehicle with high fuel costs and do significant mileage, but the administrative burden is substantial.
Example: A consultant driving a mid-range car 8,000 business miles claims £3,600 at simplified mileage rates. Their actual vehicle costs for the year (fuel, insurance, road tax, servicing, depreciation) are £5,500, of which 60% is business use = £3,300. In this case, simplified mileage actually gives a higher claim with far less work. A delivery driver doing 20,000 business miles in the same car would get £7,000 on actual costs vs £7,000 on simplified (10,000 × 45p + 10,000 × 25p). At very high mileage with an expensive vehicle, actual costs may win, but the difference is often marginal and the extra paperwork isn't worth it.
The 10,000-mile threshold: the bit most people get wrong
The 45p rate only applies to the first 10,000 business miles in the tax year. After that, it drops to 25p. This catches people out in two ways:
- High-mileage drivers claim too much. If you do 15,000 business miles, the last 5,000 should be at 25p, not 45p. Overclaiming triggers HMRC enquiries.
- Everyone else claims too little. If you're not tracking every business mile, you'll never hit 10,000 and you'll leave the full 45p on the table. Every unrecorded mile is money you're giving away.
What's worse, if a single journey crosses the 10,000-mile mark, it should technically be split: part at 45p, part at 25p. Almost nobody does this correctly by hand. The mileage allowance example walks through exactly how this works.
Example: You've done 9,980 business miles this year. Your next job is a 40-mile round trip. The first 20 miles are at 45p (£9.00), the remaining 20 are at 25p (£5.00). Your total for that journey is £14.00, not £18.00 at a flat 45p. Small difference per trip, but it adds up, and it matters if HMRC check.
What counts as a business mile?
This is simpler than most people think, but there's one common trap:
- Visiting a client or customer: business
- Driving to a job site or supplier: business
- Travelling between two workplaces: business
- Your regular commute from home to your usual workplace: not business
- Personal errands, even in your work van: not business
The commute rule trips up a lot of tradespeople. If you have a fixed workshop or office that you go to every day, that drive doesn't count. But if your "workplace" changes daily (different job sites, different clients), then those journeys are claimable.
According to HMRC's guidance on business travel, the test is whether the journey is "wholly and exclusively for business purposes." If you're driving to a customer's house to fix their boiler, that's business. If you're driving to your own lock-up, that's a commute. For more detail on this distinction, see the guide to business mileage vs commuting.
The new tax year is 3 weeks away: what to do now
Whether you've been tracking mileage all year or you've been scribbling in a notebook (or not tracking at all), here's what to sort out before 6 April:
- Finish classifying this year's journeys. Any unclassified miles are unclaimed money. Go through your records and mark everything as business, personal, or commute before the tax year closes.
- Export your 2025/26 records. Generate a report now while the details are fresh. You'll need this for your Self Assessment, and HMRC can request records going back several years.
- Start fresh on 6 April. The 10,000-mile counter resets. Make sure your tracking is set up and ready to go from day one of the new tax year.
- Set up auto-tracking. If you're still relying on memory or a paper log, you're losing miles. An app that detects driving automatically captures journeys you'd otherwise forget.
A sole trader doing 12,000 business miles a year can claim £5,000. That's 10,000 × 45p (£4,500) plus 2,000 × 25p (£500). If you're not tracking properly, how much of that are you actually claiming?
Stop guessing. Start tracking.
Most mileage apps either charge a fortune, get the 45p/25p split wrong, or make you tap "start" and "stop" every time you get in the van. That's why I built KeptMiles.
KeptMiles auto-detects when you're driving, records every mile, handles the 10,000-mile threshold correctly, and generates HMRC-ready reports you can hand straight to your accountant.
KeptMiles is free to use on Google Play, built for sole traders, tradespeople, and small business owners who drive for work.
The 2026/27 tax year has started. Get set up now so you're tracking from day one.
