Self-Employed Mileage Allowance and How to Calculate It

If you need to travel as part of your self-employed work, then you can get a tax deduction based on the amount of miles you’ve travelled. But what are the rules for self-employed mileage allowance, and how can you make a claim?

What is Self-Employed Mileage Allowance?

If you have to drive to and from a client or a job as part of your freelance work, you can claim back the mileage from HMRC. HMRC suggests that self-employed workers use a “simplified expenses” system. When it comes to vehicles and transport, this means you’ll calculate your expenses using a flat rate for mileage.

The alternative would be to work out the actual costs of running your vehicle. For this, you’d have to consider car insurance, the price of fuel, ongoing maintenance and repairs, and more. Obviously, things would get very complicated very quickly. Using a flat rate for mileage makes things easier for both you and the taxman.

If you use your car for business as a freelancer, you can claim back business mileage

What Are HMRC’s Self-Employed Mileage Allowance Rates?

At the time of writing, these are HMRC’s flat rates for self-employed mileage allowance:

  • First 10,000 miles – 45p per mile
  • For every mile after 10,000 miles – 25p per mile
  • For motorbikes – 24p per mile

So for example, if you’ve driven 12,000 miles for business reasons over the course of a year, you can claim back:

  • 10,000 miles x 45p = £4,500
  • 2,000 miles x 25p = £500
  • Total = £5,000

It’s worth reading the full guide to simplified expenses and flat rate self-employed mileage allowance on the government’s website.

On top of this, you can claim back for a range of additional travel expenses, including fuel, parking, train fares, and even meals on overnight business trips. Head here for a full list of allowable business travel expenses, with a guide on how to claim.

Self-Employed Mileage Allowance – What Counts as Business Travel?

You cannot claim back on all of your journeys. You can only claim back for journeys that you take as part of your self-employed work. If you’re self-employed, you might work in a rented office, or you might work from home. In either case, travelling to and from your office from home does not count as a business trip. This is commuting, and the self-employed mileage allowance doesn’t include commuting.

So what does it cover? Here’s how HMRC defines business travel:

  • Any travel between your permanent workplace and a temporary workplace. If you’re self-employed, this could include trips from your home to a client, or to a supplier.
  • Travel between temporary workplaces – such as a journey from a client’s property to a supplier, and back again.
  • Travel between two workplaces in the same employment. So if you commute to an office from home, you cannot claim for those miles. But if you then drive from this office to another office, or to a client’s property for an onsite job, then you can claim back these miles.

How to Record and Claim Mileage Allowance

If you want to claim back your self-employed mileage allowance, you’ll have to keep some careful records.

For each business trip you take, keep a record of:

  • The date you made the trip.
  • The start and end address of your trip. Make sure to include the postcode of each location.
  • The total distance you travelled, in miles.
  • The reason you made the trip. Include the name of your customer, or your supplier.

You can keep a record of all of these things yourself, on a spreadsheet. Alternatively, certain apps will help you automatically record your self-employed mileage. If you are keeping track of things yourself, remember the HMRC’s flat rates: 45p per mile for your first 10,000 miles, and 25p per mile for everything above 10,000 miles.

To claim back your self-employed mileage allowance, you simply need to include the amount in the expenses section of your self-assessment tax return. There’s no need to submit any of your records. However, you should keep all of your records, just in case you ever need to prove any details you included in your tax return.

Safeguarding Against Costly HMRC Investigations

It’s vital that you keep detailed records, as HMRC investigations can be immensely costly and time-consuming. You can read our full guide to safeguarding yourself against HMRC investigations.

No self-employed worker should be without some form of insurance cover. Insurance can cover your legal expenses in the event of tax investigations. So no matter what happens, you’ll always be able to continue trading, and you’ll never have to worry about insolvency.

At Tapoly, we specialise in providing comprehensive and affordable insurance for self-employed workers. Our flexible tailored cover starts at just 50p a day, and you can get a free quote online in minutes. Head here for more information.