Should I claim mileage or actual vehicle costs?

Compares the flat approved mileage rate against claiming the business share of what the vehicle really costs you.

On the figures so far

Approved mileage rate gives the larger claim — £4,400 against £3,543, worth £171 in tax.

certain confidence£857 at stake

Every figure came from you, and the gap is £857 — well outside rounding.

Refine it in 5 questions below.

The decision

Approved mileage rate gives the larger claim — £4,400 against £3,543, worth £171 in tax.

£857 better than actual costs, business share, on the same figures.

57%Business use
£4,400Mileage claim
£3,543Actual costs claim
20%Your marginal rate

Why

8,000 business miles out of 14,000 makes the vehicle 57% business use.
The approved rate pays 55p for the first 10,000 miles and 25p after that. The drop is per tax year and per person, not per vehicle.
Actual costs are only deductible in proportion to business use, so £6,200 of total cost becomes a £3,543 claim.
The mileage rate is meant to cover depreciation as well as fuel, which is why you cannot claim capital allowances on top of it.
This choice is effectively permanent for the vehicle: once you claim actual costs you cannot move to the mileage rate for it.

Every option, compared

Ranked by deduction — higher is better.

Deduction for each option, with the workings.
Option	Approved mileage rateBest	Actual costs, business share
First 10,000 miles at 55p	£4,400	—
Remaining miles at 25p	£0	—
Total deduction	£4,400	—
Tax saved at 20%	£880	£709
Running costs	—	£4,200
Capital allowance	—	£2,000
Business share (57%)	—	£3,543
Deduction	£4,400	£3,543

Approved mileage rate: No receipts beyond a mileage log. Covers fuel, insurance, servicing and depreciation together.
Actual costs, business share: Every receipt kept, and a record of business against private use for the whole year.

Approved mileage rate

Best

£4,400Deduction

First 10,000 miles at 55p: £4,400
Remaining miles at 25p: £0
Total deduction: £4,400
Tax saved at 20%: £880

No receipts beyond a mileage log. Covers fuel, insurance, servicing and depreciation together.

Actual costs, business share

£3,543Deduction

Running costs: £4,200
Capital allowance: £2,000
Business share (57%): £3,543
Tax saved at 20%: £709

Every receipt kept, and a record of business against private use for the whole year.

Does this apply to you?

Each of these has to be true. Where your answers settle it we have said so; where they cannot, the test is yours to check.

You use the vehicle for business journeys. — met, on your answers
ITTOIA 2005 s. 34
For the mileage rate: your turnover was below the VAT registration threshold when you started using the vehicle. — we cannot tell from your answers
ITTOIA 2005 s. 94D
You have not already claimed capital allowances on this vehicle. — we cannot tell from your answers
ITTOIA 2005 s. 94D(3)
You have kept a record of business mileage. — met, on your answers
TMA 1970 s. 12B

What this does not model

You must use the same method for the whole time you own the vehicle.
Commuting to a regular workplace is not business mileage.
VAT on fuel is a separate claim with its own rules and is not modelled.
If the vehicle is owned by a company rather than you, this is the wrong comparison — see the company car tool.

This is information, not tax or financial advice. It shows how the rules apply to the figures you entered — it does not know the rest of your circumstances. Worth checking with an accountant before you act.

Rates as at 6 April 2026 — the 2026/27 tax year.

What to keep

The figures above are only as good as what sits behind them. These are the records HMRC would ask for.

A mileage log with date, journey, purpose and miles — kept as you go, not reconstructed at the year end.
Total annual mileage, for the business proportion under the actual-cost method.
Fuel, insurance, servicing, MOT, repairs and road tax receipts if claiming actual costs.
The purchase invoice and date, for capital allowances.
For a company, the difference between reimbursing AMAP and paying actual costs — they are taxed differently.

The dates that matter

When	What	If you miss it
When the vehicle first comes into business use	Choose the method for that vehicle.	The choice is effectively made by what you claim first, and cannot be changed for that vehicle afterwards.
31 January after the tax year	File the return with the claim.	Late filing penalty from £100, rising after three months.
5 April, four years after	Amend an earlier year if you claimed the wrong method or nothing at all.	Out of time — and unclaimed employment mileage is one of the most common four-year backdated claims.
Each tax year	The 10,000-mile AMAP band resets.	Nothing carries forward; the first 10,000 miles at 45p is per year, per person, across all employments in the same group.

How to actually do it

Log the mileage
Date, from, to, purpose, miles. An app or a notebook both work; what matters is that it was written at the time.
www.gov.uk/simpler-income-tax-simplified-expenses/vehicles-
Work out the mileage claim
45p for the first 10,000 business miles in the tax year and 25p after that, for cars and vans. 24p for motorcycles, 20p for bicycles.
www.gov.uk/government/publications/rates-and-allowances-travel-mileage-and-fuel-allowances
Work out the actual-cost claim
Add every running cost for the year, multiply by the business proportion of total miles, then add capital allowances on the vehicle at the same proportion.
www.gov.uk/capital-allowances/business-cars
Compare, then commit
Whichever is larger is the one to use — but the choice sticks to that vehicle for as long as you have it, so compare over the expected life, not just this year.
If you are employed, claim the difference
Where your employer pays less than the AMAP rate, the shortfall is claimable as mileage allowance relief. Four years are in time.
www.gov.uk/tax-relief-for-employees/business-mileage-fuel-costs

Worked examples

Three situations, worked through. They use the same rules as the tool above, so you can check the arithmetic against a case near your own.

8,000 business miles, 12,000 total, older car with low running costs

Mileage claim: £3,600
Running costs: £3,200
Business proportion: 67%
Actual-cost claim: £2,133 plus capital allowances

Mileage wins comfortably. The flat rate is generous on a cheap car, because it is calibrated on an average one.

8,000 business miles, 10,000 total, £35,000 car bought this year

Mileage claim: £3,600
Running costs: £5,500
Business proportion: 80%
Actual costs plus first-year allowances: Substantially more

A new, expensive or electric car reverses the answer — the capital allowance in year one is the whole of the difference.

18,000 business miles, 20,000 total, mid-range car

First 10,000 miles at 45p: £4,500
Next 8,000 at 25p: £2,000
Mileage claim total: £6,500
Actual costs at 90%: Often higher

Past 10,000 miles the rate drops to 25p and the actual-cost method starts to catch up. High-mileage drivers should check every year before committing.

The rules behind this

Every figure above comes from one of these. Where we have interpreted rather than calculated, the tool says so.

Approved Mileage Allowance Payments are 45p for the first 10,000 business miles in the tax year and 25p thereafter.
ITEPA 2003 ss. 229–236
Simplified mileage is available to unincorporated businesses under the VAT threshold when the vehicle came into use.
ITTOIA 2005 s. 94D
Once capital allowances have been claimed on a vehicle, the mileage rate cannot be used for it.
ITTOIA 2005 s. 94D(3)
Ordinary commuting to a permanent workplace is not an allowable business journey.
ITEPA 2003 s. 338
Employees may claim mileage allowance relief where the employer pays less than the approved rate.
ITEPA 2003 s. 231

Questions people ask

Can I switch methods later?

Not for the same vehicle. The choice is made when the vehicle comes into business use and lasts as long as you own it. You can use a different method for a different vehicle.

Does the 10,000-mile threshold reset each year?

Yes, every tax year, per person. It is not per vehicle and not per employer — employments in the same group are added together.

Is my commute a business journey?

No, if it is to a permanent workplace. Travel to a temporary workplace, or between workplaces during the day, is allowable. A workplace you attend for more than 24 months, or expect to, stops being temporary.

What if my employer pays less than 45p?

Claim the difference as mileage allowance relief. At 25p paid against 45p approved, an employee doing 6,000 business miles is owed relief on £1,200 — and it backdates four years.

Does the mileage rate cover everything?

Fuel, insurance, servicing, repairs, road tax and depreciation. It does not cover parking, tolls or congestion charges on business journeys, which are claimable on top. Parking fines never are.

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