How to Claim Mileage Correctly Through Your Business
Claiming mileage is one of the simplest and most common tax reliefs available to business owners, yet it is also one of the areas most often claimed incorrectly.
Done properly, mileage claims can reduce tax and reimburse you fairly for using your personal vehicle for business. Done incorrectly, they can lead to overclaims, HMRC challenges, or missed relief altogether.
Here is what you need to know to claim mileage correctly and confidently.
What Counts as Business Mileage
Business mileage includes journeys that are wholly and exclusively for business purposes.
Examples include:
Travelling to meet clients or customers
Visiting suppliers
Travelling between different work locations
Going to training courses related to your business
What does not count:
Travel from home to your regular place of work
Personal journeys
School runs or errands, even if done on a workday
Understanding the difference is essential, as HMRC do not allow claims for ordinary commuting.
HMRC Approved Mileage Rates
If you use your personal vehicle for business travel, you can claim mileage at HMRC’s approved rates.
Current rates are:
45p per mile for the first 10,000 business miles in the tax year
25p per mile for each mile over 10,000
These rates are designed to cover fuel, servicing, insurance, and general wear and tear, so you cannot claim those costs separately when using mileage rates.
Different rates apply for motorcycles and bicycles.
Sole Traders vs Limited Company Directors
How mileage is claimed depends on your business structure.
For sole traders, mileage is claimed as a business expense in your accounts and reduces your taxable profit.
For limited company directors, the company reimburses you for business mileage. This reimbursement is tax free, provided it is within HMRC rates and properly recorded.
In both cases, accurate records are essential.
What Records You Need to Keep
To claim mileage correctly, you must keep a mileage log.
Your log should include:
Date of the journey
Start and end locations
Purpose of the trip
Number of miles travelled
This can be recorded in a spreadsheet, an app, or accounting software, as long as it is accurate and consistent.
Without proper records, HMRC can disallow mileage claims.
Company Cars and Mileage
If you drive a company car, the rules are different.
You generally cannot claim mileage at the standard HMRC rates for company cars. Instead, relief is limited to fuel costs for business journeys, based on advisory fuel rates.
Company cars also come with benefit in kind implications, which can increase your personal tax bill. This is why many directors choose to use personal vehicles and claim mileage instead.
Common Mileage Mistakes
Some of the most common issues we see include:
Claiming home to office travel incorrectly
Guessing mileage instead of recording it
Mixing personal and business journeys
Claiming mileage and fuel costs together
Forgetting to claim mileage at all
Small errors can add up over time, either costing you tax relief or creating risk if HMRC review your claims.
Why Mileage Planning Matters
Mileage claims may seem small, but over a year they can add up to thousands of pounds.
Claiming correctly ensures:
You are reimbursed fairly
Your tax position is accurate
Your records stand up to HMRC checks
You avoid unnecessary stress or penalties
Like most tax reliefs, mileage works best when it is tracked regularly rather than rushed at year end.
The Bottom Line
Mileage claims are a valuable relief, but only when done correctly.
Know what counts as business travel, use the correct rates, keep proper records, and avoid common mistakes.
If you are unsure whether you are claiming mileage correctly, or want help setting up a simple system to track it properly, get in touch. We are here to help you stay compliant and make the most of the reliefs available to you.
Meet Lewis
Lewis is a professional accountant and founder of Rhombus Accounting. He regularly shares his knowledge and best advice here on his blog and on other channels such as LinkedIn.
Book a call today to learn more about what Lewis and Rhombus Accounting can do for you.
