Hamster blog

HMRC mileage rates 2026/27 for sole traders: 55p and 25p explained

By the Hamster team · Published 25 October 2026

Last checked: 25 October 2026 against GOV.UK · Figures are for the 2026–27 tax year unless stated

The rates

HMRC's simplified expenses for vehicles let sole traders claim a flat amount per business mile instead of adding up what the vehicle actually costs to run.

From 6 April 2026 (the 2026–27 tax year):

• Cars and goods vehicles, such as vans: 55p a mile for the first 10,000 business miles, then 25p a mile
• Motorcycles: 24p a mile

Before 6 April 2026:

• Cars and goods vehicles: 45p a mile for the first 10,000 business miles, then 25p a mile
• Motorcycles: 24p a mile

The car and van rate had been 45p for years, so the rise to 55p is a meaningful increase for anyone who drives for their side hustle.

What the flat rate covers

The flat rate is instead of the actual costs of buying and running your vehicle. GOV.UK gives insurance, repairs, servicing and fuel as examples. You cannot claim those as well.

You can claim parking and other travel, such as train journeys, on top of the flat rate. Fines and penalty charges are never allowable, whichever method you use.

Which miles count

Only business journeys count. GOV.UK says you cannot claim for non-business driving or for travel between home and work. Keep a log of each business journey, made at the time:

• the date
• where you started and finished
• what the journey was for, such as a delivery shift or a client visit
• the business miles

A record made as you go is far easier to rely on than an estimate pieced together in January, and it is what the flat rate is calculated from.

Who can use it

• It works for cars, goods vehicles and motorcycles.
• It cannot be used for cars designed for commercial use, such as black cabs, hackney carriages and dual-control driving instructor cars.
• You cannot use it for a vehicle you have already claimed capital allowances on, or one whose cost you deducted as an expense.
• You do not have to use it for every vehicle. But once you use it for a vehicle, you must keep using it for as long as that vehicle is used in your business.

Flat rate or actual costs?

With actual costs, you claim the business share of what you really spend: fuel, insurance, repairs, servicing, vehicle tax, breakdown cover and so on. You also claim capital allowances on the cost of buying the car, which you can do on cash basis as well as traditional accounting.

The SA103S notes set the capital allowance rates for cars: 18% a year for cars with CO2 emissions up to 50g/km, 6% a year above that, and 100% in the first year for a new, unused zero-emission car. Any private use reduces the claim.

A worked example

Kwame is a self-employed courier. In 2026–27 he drives 18,000 miles, 14,000 of them on business, and pays £240 for parking on jobs.

Flat rate:

• 10,000 miles × 55p = £5,500
• 4,000 miles × 25p = £1,000
• Parking: £240
• Total: £6,740

Actual costs: fuel £2,700, insurance, vehicle tax and breakdown cover £1,200, servicing and repairs £650. That is £4,550 a year, and 14,000 of his 18,000 miles were business, so he can claim that share (about 77.8%).

• Running costs: £4,550 × 14,000 ÷ 18,000 = £3,538.89
• Capital allowances on the £9,000 car he bought at the start of the year (over 50g/km, so 6%): £540, of which the business share is £420
• Parking: £240
• Total: £4,198.89

The flat rate gives Kwame about £2,540 more in deductions. If his profit is taxed at 20%, that is roughly £508 less tax.

Actual costs tend to win when a vehicle is expensive to run for the miles it does, or in the year you buy a new zero-emission car and can claim its whole cost. Remember that the choice is locked in for that vehicle once you use the flat rate.

Your 2025–26 return

The return due on 31 January 2027 covers 6 April 2025 to 5 April 2026, before the rate rose. So business miles in that year are 45p for the first 10,000, then 25p. Box 12 of the SA103S pages is where car, van and travel costs go.

Mileage or the £1,000 trading allowance

The flat mileage rate is an expense, so you cannot claim it alongside the £1,000 trading allowance. Add your mileage allowance to your other allowable costs. If the total is more than £1,000, claim the expenses; if it is less, the allowance gives you more.

At 55p a mile, just over 1,800 business miles is enough to pass £1,000 on its own.

Keeping track

The flat rate is only as good as your mileage log. Hamster is a free Android app where you record miles with each job, and it works out the mileage allowance at the right rate for the tax year and checks it against the £1,000 allowance for you.

This is general information, not personal tax advice. Rules and rates change — check the linked GOV.UK pages or speak to an accountant about your own situation.