How Much Can You Claim? A Real Mileage Allowance Example

Most guides explain HMRC's approved mileage rates of 45p and 25p. Few show what a full tax year actually looks like in practice. Here's a realistic example (a self-employed plumber) showing exactly how much ends up in their pocket.

Meet Dave

Dave is a self-employed plumber based in Manchester. He drives a van to jobs across Greater Manchester and occasionally further afield. He works five days a week, has a workshop he commutes to, and visits 2–4 client sites per day.

His driving breaks down like this:

• Workshop commute: 12 miles each way, 5 days a week (not claimable)
• Client visits from workshop: averages 25 business miles per day
• Supply runs: roughly 40 business miles per week
• Longer jobs: a couple of 80-mile round trips per month

Monthly breakdown

Here's what Dave's business mileage looks like across the 2025/26 tax year (6 April 2025 to 5 April 2026):

The threshold month

February is where it gets interesting. Dave enters the month at 9,000 cumulative business miles and drives 1,050. His 10,000th mile falls partway through February.

The correct calculation:

• First 1,000 miles (to reach 10,000): 1,000 × 45p = £450.00
• Remaining 50 miles (above 10,000): 50 × 25p = £12.50
• February total: £462.50

This is the calculation most people (and most apps) get wrong. They either apply 45p to all of February or 25p to all of February. The correct approach splits the month at the threshold.

What Dave actually saves in tax

Dave's £4,750 mileage allowance isn't money in his pocket directly. It's a deductible expense that reduces his taxable profit. How much he actually saves depends on his tax rate.

If Dave is a basic rate taxpayer (20%), his £4,750 mileage claim saves him:

• Income tax: £4,750 × 20% = £950
• Class 4 National Insurance: £4,750 × 6% = £285
• Total saving: £1,235

If Dave earns enough to be a higher rate taxpayer (40%), the same £4,750 claim saves him:

• Income tax: £4,750 × 40% = £1,900
• Class 4 NI: £4,750 × 2% = £95
• Total saving: £1,995

Nearly £2,000 back in Dave's pocket if he's a higher rate taxpayer. That's not a rounding error. And remember, if Dave had estimated "about 10,000 miles" instead of tracking properly, his claim would be £4,500 instead of £4,750. That £250 difference costs him £65 at the basic rate or £105 at the higher rate. Every year. For his whole career.

What if Dave doesn't track properly?

Without accurate records, Dave would probably round to "about 10,000 miles" and claim £4,500. That's £250 less than his actual entitlement of £4,750. Over a career, that's thousands of pounds left on the table.

Worse, if HMRC queries his claim and he can't produce a log, they might reduce it further. A "reasonable estimate" from HMRC's perspective is always lower than what you actually drove.

Meet Sarah: a lower-mileage example

Not everyone crosses the 10,000-mile threshold. Sarah is a self-employed management consultant based in Leeds. She works from home three days a week and visits clients the other two. Her business driving is lower than Dave's but still adds up.

Sarah's typical week:

• Two client visits: averaging 60 miles round trip each
• Occasional meetings in other cities: roughly one 150-mile round trip per month
• No commute: home is her principal place of business

Over the tax year, Sarah drives about 6,000 business miles. She never crosses the 10,000-mile threshold, so every mile is at the full 45p rate.

Sarah's claim: 6,000 × 45p = £2,700

As a higher rate taxpayer, that saves Sarah £1,080 in income tax plus £54 in Class 4 NI, a total of £1,134 off her tax bill. For someone who only drives to clients twice a week, that's a significant saving that many consultants miss entirely because they don't think they "drive enough to bother tracking."

Mileage allowance vs actual costs: Dave's van

Dave drives a van. Vans tend to be thirsty, expensive to insure, and costly to maintain. So would Dave be better off claiming actual costs instead of the mileage allowance?

Here are Dave's real numbers for the year:

Dave drives 11,000 business miles out of a total of 17,000 miles (including his commute and personal use). His business proportion is 11,000 ÷ 17,000 = 64.7%.

Under the actual cost method, Dave could claim 64.7% of £9,035 = £5,846.

Compare that to his mileage allowance of £4,750. The actual cost method would save Dave an extra £1,096 in deductible expenses. At the basic tax rate, that's about £285 more back in his pocket.

But there's a catch. The actual cost method requires Dave to keep every receipt: every fuel top-up, every service bill, the insurance certificate, the finance agreement. He needs to accurately record total miles and business miles. And crucially, once he uses the actual cost method for this van, he cannot switch back to the simplified mileage allowance for it. If he buys a new van, he can choose again. But for this van, the decision is permanent.

For Dave's relatively expensive van, actual costs win on paper. For someone like Sarah with a modest car, the mileage allowance almost certainly wins. The right choice depends on your vehicle costs, your business mileage proportion, and how much paperwork you're willing to do. For most people, the simplicity of the 45p/25p rate is worth the slightly lower claim.

How it goes on the Self Assessment

Dave files his Self Assessment using the SA103 (self-employment) supplementary pages. His mileage claim goes in as an expense against his trading income.

If Dave uses the simplified mileage allowance (which he does), he enters it in Box 20 of the SA103 ("All other expenses"). He should keep a note that this figure is his mileage allowance calculation (10,000 × 45p + 1,000 × 25p = £4,750) in case HMRC query it.

If he were using the actual cost method instead, his vehicle expenses would be split across multiple boxes (fuel in one, insurance in another, repairs in another) and he'd need to calculate the business proportion for each. This is another reason the simplified method is popular: it's one number in one box.

Dave also needs to keep his mileage log for at least 5 years after the 31 January submission deadline, as HMRC can open an enquiry within that window. The log should show the date, start and end points, purpose, and distance of each business journey. See the guide on what HMRC actually requires in a mileage log.

Dave's second tax year

The 10,000-mile threshold resets every tax year on 6 April. So when the 2026/27 tax year starts, Dave is back to zero. His first 10,000 business miles are at 45p again.

If Dave's business grows and he takes on an apprentice, his driving patterns might change. Say in year two he does 13,000 business miles:

• First 10,000 miles: 10,000 × 45p = £4,500
• Next 3,000 miles: 3,000 × 25p = £750
• Total claim: £5,250

At the basic rate, that saves Dave £1,365 in tax and NI. At the higher rate, £2,205. And if his apprentice travels with him in the van for business, Dave can claim an extra 5p per mile for carrying a passenger, adding £650 to his claim across 13,000 miles.

Year on year, the mileage allowance is one of the biggest tax deductions available to self-employed people who drive. A plumber like Dave will claim upwards of £4,500 every single year. Over a 30-year career, that's £135,000 in deductible expenses. The only variable is whether you track it properly or leave a chunk of it unclaimed.

What about vehicles other than cars and vans?

The rates are simpler for other vehicle types. No threshold split:

The bottom line

For a typical tradesperson driving 10,000–15,000 business miles per year, the mileage allowance is worth £4,000–£5,500 in tax-deductible expenses. That's real money: potentially £1,000+ off your tax bill depending on your rate. For more on the rates themselves, see the guide to HMRC mileage rates for 2026/27.

Even lower-mileage workers like Sarah, doing 6,000 business miles, are looking at £2,700 in deductions. The mileage allowance isn't just for people in vans doing 15,000 miles. If you drive for work at all, it's worth tracking.

The only requirement is that you can prove it. A mileage log with dates, destinations, purposes, and distances. Kept automatically, it takes zero effort. Kept manually, most people give up by June.

Track every business mile automatically. KeptMiles handles the 45p/25p threshold split so you don't have to.