Fuel vs Mileage Claims: Which Is Better for Sole Traders?

If you are a UK sole trader, you can claim for the vehicle you use in your business in one of two ways: a flat rate per business mile, or the business share of what the vehicle actually costs you. You cannot take fuel receipts and the mileage rate for the same vehicle, because the rate already covers fuel. Which method leaves you better off depends on how many miles you drive, what your vehicle costs to run and how tidy your records are.

This guide explains both methods, shows a worked example, and gives you a simple way to decide. It also covers the records HMRC expects and the mistakes that cause trouble later.

TL;DR

• The mileage method is a flat rate per business mile. For 2026-27 it is 55p for the first 10,000 miles and 25p after that for cars and vans.
• The rate covers fuel, insurance, repairs and depreciation, so you cannot also claim fuel receipts on the same vehicle.
• The actual-cost method lets you claim the business share of running costs plus capital allowances, but needs full receipts and a business/private split.
• Once you use the mileage rate for a vehicle, you stay with it for as long as that vehicle is in the business.
• Either way, keep a mileage log written up at the time of each journey.

Table of Contents

• What each method actually means
• The current mileage rates
• Why you can’t claim fuel on top of the mileage rate
• A worked example: 12,000 business miles
• Which method suits which tradesperson
• A note for VAT-registered traders
• Which journeys count as business miles
• What records you need to keep
• Does mileage claiming change how you price jobs?
• Our perspective
• Keeping it all in one place
• Five mistakes that cause trouble
• FAQ
• Sources

What each method actually means

Sole traders can work out vehicle expenses using either simplified expenses (the mileage rate) or the actual cost method. The mileage method uses a flat rate per mile instead of the real costs of buying and running the vehicle.

The mileage rate method

You add up your business miles for the tax year and multiply them by the HMRC rate. There is no need to total up fuel, insurance, servicing or tyres. Those costs are treated as covered by the rate, as is depreciation, so you cannot claim capital allowances on the same vehicle if you use it.

The actual-cost method

Here you claim the business proportion of the real running and maintenance costs, such as fuel, insurance, repairs, servicing, tyres and road tax. Capital allowances can sit alongside this for the cost of buying the vehicle. If you use traditional accounting and buy a vehicle for the business, you can claim capital allowances on its purchase. Under the cash basis, the rules differ for cars, so check that page before you decide.

If you also use the vehicle privately, you claim only the business portion. As GOV.UK explains for business cars, you work out what you can claim based on the amount of business use.

The current mileage rates

For 2026-27, HMRC’s simplified expenses rates are:

Before 6 April 2026 the first-10,000-mile rate was 45p, so a rate you remember from last year’s return is out of date. The tax year runs from 6 April to 5 April, and the 10,000-mile threshold resets every year. For a longer look at what the change means for tradespeople, see our piece on what 55p actually changes for sole traders.

Why you can’t claim fuel on top of the mileage rate

This is the question behind most searches for this topic, and the answer is simple. The mileage rate is built to cover every running cost of the vehicle, fuel included. HMRC’s guidance is that you cannot claim fuel receipts separately when you use the mileage method.

The same goes for insurance, repairs, MOT and servicing. Putting any of them in as a separate expense on that vehicle means claiming the same cost twice. If HMRC opens an enquiry, that is the sort of overlap it looks for.

Two things are still separate from the mileage rate:

• Parking and tolls on business journeys are generally claimed as their own costs, not as part of the per-mile figure.
• A second vehicle can use a different method from your first, because the choice is made vehicle by vehicle. Never mix methods on one vehicle.

Our guide on whether sole traders can claim fuel costs goes through the fuel side in more detail.

A worked example: 12,000 business miles

The figures below are an illustration, not a typical result. Your own costs will differ.

Say you drive a van for 12,000 business miles in the 2026-27 tax year and 3,000 private miles, so 80% of your driving is for business.

Mileage method

• 10,000 miles at 55p = £5,500
• 2,000 miles at 25p = £500
• Total claim: £6,000

Actual-cost method (illustrative running costs)

The business share at 80% is £4,720. You would then add any capital allowances available on the van’s purchase price, again at the business share. If those allowances are worth a few hundred pounds a year or more, the actual-cost method could beat £6,000. If you bought the van second-hand years ago and claimed it all already, the mileage method wins comfortably.

The lesson: the mileage rate is hard to beat for a modest-cost vehicle doing steady miles. Actual costs can pay off when the vehicle is expensive to run, has thirsty fuel use, or was recently bought.

Which method suits which tradesperson

Use these as rules of thumb, then test them against your own numbers.

The mileage rate usually suits you if:

• you drive a fairly cheap, fuel-efficient vehicle
• you do under about 10,000 business miles, where the 55p rate is at its strongest
• you do not want to total every receipt at year end
• the vehicle is already old and fully written down

Actual costs usually suit you if:

• you have just bought or financed a van for the business and want capital allowances
• the vehicle is costly to run, such as a larger van with heavy fuel use
• you do very high mileage, where the rate drops to 25p after 10,000 miles
• you already keep complete receipts for everything

High-mileage drivers are the group most likely to gain from switching at the start of a new vehicle’s life. Remember the lock-in rule: once you use the simplified mileage rate for a vehicle, you must keep using it for as long as it stays in the business. So the choice you make in the first year with a vehicle matters. If you are unsure, work out both figures before you file, and ask an accountant if the vehicle is a major purchase.

Our article on overpaying on vehicle expenses covers common ways tradespeople lose money here.

A note for VAT-registered traders

VAT adds another layer. If you are VAT-registered and reclaim VAT on fuel, GOV.UK sets out two routes: pay a fuel scale charge, or keep detailed mileage records so you can split VAT between business and private use. The route you choose affects your VAT return, so settle it before you start tracking, not after.

Which journeys count as business miles

Not every mile in the van is a business mile. In general, trips to a client’s site, a job in progress, a merchant to collect materials for a specific job, or a visit to quote count. Ordinary travel between your home and a regular, permanent place of work is commuting and does not.

Tradespeople who work from home or from a base are in a grey area more often than they expect. Travel from home to a one-off job site is normally business travel. Travel to somewhere you go every day as your permanent base is more likely to be commuting. If your pattern is unusual, check HMRC’s guidance on allowable travel expenses or ask your accountant, rather than guessing.

Private detours matter too. If you stop for a personal errand on the way to a job, log only the business part of the journey.

What records you need to keep

HMRC guidance says a contemporaneous record of business mileage should be kept to support a flat-rate claim. Contemporaneous means written at or near the time, not rebuilt from memory in January.

For each journey, record:

1. the date
2. the start and end locations (or the job address)
3. the business purpose, such as the client or job name
4. the miles driven
5. the odometer reading at the start and end of the tax year

If you use actual costs, keep every receipt and invoice for the vehicle, and a log that shows the business/private split. GOV.UK’s record-keeping guidance makes the point that a simple system soon becomes second nature, and organised records help you see what you can claim.

Pro tip: log the journey at the end of each job, while you are still sat in the van. Ten seconds then saves an evening of guesswork later. Our mileage log template and HMRC rules shows exactly what to include.

Does mileage claiming change how you price jobs?

It should. Travel is a real cost of every job, and the mileage you claim is a tax figure, not the amount a job costs you in cash. If you only look at tax, you can miss which customers are expensive to serve. Working out job cost tracking lets you see true profitability per job, including the miles and time it takes to reach it. A 40-mile round trip for a small repair that earns £90 looks very different once travel is counted.

Our perspective

We built TradeTally around the admin that follows a day on site, and vehicle claims are where we see tradespeople lose the most time and the most certainty. The usual pattern is not a wrong choice of method. It is a missing log. People often have a decent idea of their mileage but cannot show it, and that is the part that worries them when HMRC asks.

Our view is plain. Pick one method per vehicle, understand why, and then keep the records that match it. If you go with mileage, a live log beats any amount of end-of-year reconstruction. If you go with actual costs, snap every receipt the same day and keep the business/private split visible. Neither method is clever. Both are dull, repeatable habits, and the dull habits are the ones that hold up.

We would also say: do not choose by instinct. Run the sum once, with real numbers, before you file.

— Simon

Keeping it all in one place

If the paperwork is what puts you off, TradeTally is built for it. You can snap receipts in the van, keep business expenses separate from personal ones, and get tax-ready records with SA103F export for your Self Assessment. Our Starter plan is £0 per month, and Professional is £12 per month or £120 per year. You can see what is included on the pricing page, or check how your expenses would be organised with our guide to splitting personal and business spending.

Five mistakes that cause trouble

1. Claiming fuel and mileage together. The rate already covers fuel. Pick one.
2. Switching methods mid-life. After you use the mileage rate on a vehicle, you stay with it.
3. Using last year’s rate. The first-10,000-mile rate moved from 45p to 55p on 6 April 2026.
4. Counting commuting. Home to a permanent workplace is not a business mile.
5. No log. A round-number total with no journey detail is hard to defend.

For wider habits, our expense tracking guide covers how to keep the rest of your costs in order.

FAQ

Can I claim fuel receipts and the mileage rate for the same van?

No. The mileage rate is designed to cover all running costs, including fuel, so claiming receipts as well would count the cost twice. You choose one method for each vehicle.

Can I switch from mileage to actual costs later?

Not for the same vehicle. HMRC’s manual says that once you use the simplified mileage rate for a vehicle, you must keep using it for as long as the vehicle stays in your business. A new or different vehicle can use a different method.

What is the current mileage rate for cars and vans?

For 2026-27 it is 55p per mile for the first 10,000 business miles and 25p per mile after that. Motorcycles are 24p per mile. The 10,000-mile threshold starts again each tax year on 6 April.

What proof of mileage do I need?

Keep a log written at the time of each journey, with the date, destination or job, purpose and miles. HMRC guidance expects a contemporaneous record to support a flat-rate claim. If you use actual costs, keep all receipts as well.

Sources

• Simplified expenses if you’re self-employed: Vehicles, GOV.UK
• BIM75005 Simplified expenses: expenditure on motor vehicles, HMRC manual
• Expenses if you’re self-employed: Car, van and travel, GOV.UK
• Claim capital allowances: Business cars, GOV.UK
• Reclaim VAT on business expenses, GOV.UK
• How to keep records as a small business, Tax Confident
• Job cost tracking: how to measure true job profitability

Recommended

• Can Sole Traders Claim Fuel Costs?
• A Guide to HMRC Mileage Claims
• 55p per mile: UK sole traders’ mileage log template and HMRC rules
• Mileage rate 2026: what 55p actually changes for sole traders