Mileage allowance and van costs for tradespeople

Your van is probably your biggest business cost after materials, so how you claim for it matters. The HMRC mileage rate is 55p a mile for 2026/27. This guide shows when the flat rate beats claiming actual costs, with GOV.UK figures checked on 12 October 2026.

What are the mileage rules, in short?

The government announced the increase on 21 May 2026 and backdated it to 6 April 2026. Sole traders have two ways to claim for a vehicle:

• Simplified expenses (the flat rate): business miles × 55p or 25p. This covers fuel, insurance, servicing, tax and the cost of the vehicle itself. You can still claim parking and tolls on top.
• Actual costs: the business share of fuel, insurance, repairs, servicing, road tax, breakdown cover and finance interest, plus capital allowances on the vehicle.

The rules are the same across England, Scotland, Wales and Northern Ireland.

Who can use which method?

Two rules that lock you in

• GOV.UK says you cannot claim simplified expenses for a vehicle you have already claimed capital allowances for.
• Once you use the flat rate for a vehicle, you must keep using it for as long as that vehicle is in your business.

So the choice you make in the first year you use a vehicle is the choice you live with.

Which journeys count?

GOV.UK says you cannot claim "travel between home and work". For many trades, though, home is not "work" in that sense. HMRC's Business Income Manual says that for an itinerant trader, someone who travels from home to a number of different places for temporary jobs, "you should allow the costs of travelling between the residence and the sites at which the trader works." It cites the case of a bricklayer, Horton v Young, who worked on short-term sites and kept his tools and books at home. Journeys to a fixed yard, shop or workshop you go to every day are ordinary commuting and not allowed. Trips to merchants, between jobs and to quote are business miles.

How do you choose and claim, step by step?

1. Log every business journey from day one: date, start and end, purpose (customer or job number) and miles. Note your total miles too, from the odometer, so you can work out business use.
2. Keep all your vehicle receipts for the first year: fuel, insurance, servicing, tyres, road tax, breakdown cover and finance.
3. Work out both options at the year end: business miles × 55p and 25p, versus the business share of actual costs plus capital allowances.
4. Think ahead. The flat rate locks in for that vehicle. Capital allowances can give a big deduction in year one if you buy a van.
5. Claim on your tax return (or in your MTD quarterly updates if you are in Making Tax Digital).
6. Directors: submit a mileage claim to your company each month and have it pay you up to the approved rates.

What are the limits and key figures?

Vans count as plant and machinery, not cars, for capital allowances, so the Annual Investment Allowance can cover the full business share of a van in the year you buy it. Cars do not qualify for it. There is no separate deadline for mileage claims: they go on your Self Assessment return by 31 January after the tax year ends.

Worked example: flat rate vs actual costs

Example 1: a plumber with a newer van

A sole trader plumber buys a £28,000 van (excluding any VAT reclaimed) and drives 12,000 business miles a year, about 90% of total miles. Running costs are £5,600 a year (fuel £3,600, insurance £1,200, servicing and tyres £800).

Actual costs win by about £13,200 of deductions over five years, worth roughly £3,432 at 20% income tax plus 6% Class 4 NI. They also front-load the relief into year one.

Example 2: a cleaner with an older small car

A self-employed cleaner drives 5,000 business miles a year in a paid-off car, about half of total miles. Running costs are £3,000 a year.

• Flat rate: 5,000 × 55p = £2,750.
• Actual costs: 50% × £3,000 = £1,500, with little capital allowance left on an old car.

The flat rate wins by £1,250 a year, with far less paperwork.

Example 3: a limited company director

A director of an electrical company uses their own car for 8,000 business miles. The company can pay 8,000 × 55p = £4,400 tax free and NI free, and the company deducts it as a cost. If the director drove a company van with private use instead, a £4,170 van benefit charge (plus £798 if the company pays for private fuel) may apply. Our sole trader vs limited company guide covers how directors are taxed.

What mistakes do tradespeople make?

• Using an old rate for 2026/27. The rate is 55p for the first 10,000 miles and 25p after that.
• Switching methods on the same vehicle. You cannot move to the flat rate after claiming capital allowances, and you cannot leave the flat rate while you keep the vehicle.
• Claiming commuting to a fixed yard or workshop. That is ordinary commuting.
• Claiming fuel on top of the flat rate. The 55p covers fuel and running costs. Only parking and tolls go on top.
• No mileage log. Without records, a claim is hard to defend.
• Ignoring private use when claiming actual costs. Only the business share counts.

What software helps track mileage?

The easiest log is the one you do not have to think about. Many job management apps record where your team is through GPS, and your job diary already shows every address you visited. Accounting packages can store mileage claims and vehicle costs and feed them into your tax return or MTD updates. Our accounting software for tradesmen guide compares the options and which job apps link to them.