Claiming mileage and travel costs for business

Why your mileage record is the backbone of a clean claim

Every year, thousands of small business owners leave money on the table — or worse, create a problem with HMRC — because of how they record business travel. Mileage is one of the simplest expenses to claim, but it is also one of the most frequently challenged. The difference between a stress-free claim and an awkward letter from HMRC usually comes down to two things: a detailed log of business journeys, and a clear understanding of what counts as business travel in the first place.

Get those right and you can reclaim travel costs with confidence. Get them wrong and you risk losing the relief, plus interest and penalties on the amounts you have over-claimed.

The approved mileage rates — and how they work

If you use your own vehicle for business, HMRC lets you claim a fixed amount per mile rather than working out the actual running costs. This is known as the approved mileage allowance payments system. The current rates are:

• Cars and vans: 45p per mile for the first 10,000 business miles in the tax year, then 25p per mile after that.
• Motorcycles: 24p per mile.
• Bicycles: 20p per mile.

Those rates are designed to cover fuel, wear and tear, insurance and depreciation in one neat figure. You can claim them on top of certain other costs, such as parking fees, tolls and congestion charges, provided they are genuinely for business journeys.

If you are a sole trader, the claim reduces your taxable profit. If you run a limited company, you can claim the mileage from the company, and the payment is generally tax-free and free of National Insurance in your hands.

Commuting is not business travel

This is the rule that catches most people out. Travel between your home and your regular place of work is ordinary commuting, and it is not an allowable business expense. You cannot claim it, and no mileage log will make it claimable.

There are, however, some important exceptions:

• Travel to a temporary workplace — a site or client location you attend for a limited period, generally no more than 24 months — is usually allowable.
• Travel between two business locations, such as from one client to another, is allowable.
• If your home is your base and you travel out to see clients, those journeys are generally business travel, though the rules here need care and a good record of why you are travelling.

The test is not simply "was I travelling for work?" It is whether the journey is part of your business activity or just getting you to the place where you normally work.

Building a mileage log that stands up

HMRC does not demand a particular format, but it does expect enough detail to show that the claim is real. A single annual total will not do. For each journey, record:

• The date.
• The start and end point.
• The purpose of the trip (for example, "site visit to quote for kitchen refit").
• The miles travelled.

A simple spreadsheet works well, and plenty of mileage apps do the job too. The advantage of digital records is that you can capture journeys as they happen rather than reconstructing them from memory in January. Keep your records for at least six years after the end of the relevant tax year, because HMRC can ask to see them.

You do not need fuel receipts to support an approved mileage claim, since the rate is fixed. Do keep receipts for the extras you claim separately, such as parking and tolls.

Common pitfalls and how to avoid them

A few habits cause most of the trouble:

• Claiming the same journey twice — for example, through both mileage and actual fuel costs. Pick one method and stick to it.
• Rounding up mileage generously. Estimate honestly, or better, use a route planner and note the figure.
• Forgetting to reset the 10,000-mile threshold each tax year, which changes the rate from 45p to 25p.
• Mixing personal and business trips without noting which is which. A weekend away that includes a quick client visit is not a business journey.
• Assuming a company car works the same way. It does not — for company cars you typically use advisory fuel rates and fuel receipts instead.

If you are unsure whether a particular journey qualifies, note down the facts and ask before you claim. It is far easier to leave something out than to unpick an inflated claim later.

Getting it right from the start

Good mileage records take a few seconds per journey and save hours of guesswork later. Set up a system you will actually use, note the purpose of every trip, and keep commuting firmly out of the business column. That way your travel costs stay straightforward, defensible, and exactly where they belong — reducing your tax bill rather than creating a headache.