Keeping track of your business mileage can be tedious and easily become a task that slips to the back of your mind. However, if you’re self-employed, either as a sole trader or a small business owner, then claiming back business mileage is something you should be treating as a priority.

All trips you do add up, therefore, it’s important you make the most of what you can claim.

Claiming business mileage from HMRC

As a self-employed person, you can claim back mileage from HMRC if you use your personal vehicle for business trips. According to HMRC, these trips are defined as journeys you make ‘wholly and exclusively’ for business purposes.

These include:

  • Trips taken to complete work, for example deliveries
  • Trips between two workplaces for the same job
  • Going from an employee’s home to a client
  • Going to a temporary workplace

However, the following don’t count as business trips:

  • Driving to a location situated near your workplace – e.g. driving to a client’s office located just next to your home
  • Trips in which your main purpose isn’t business-related – e.g. running a business-related errand during a personal trip

Click here for more info on what counts as a business trip.

Business mileage calculation

There are two approaches you can take:

  1. Add up all your motor expenses for the year. Calculate the number of business miles as a percentage of your total miles. This percentage can be used to work out the business percentage of your costs.
  2. Claim a fixed rate mileage allowance. The costs of purchase and upkeep are included in the rate.

The second approach is a simple option for smaller businesses, as there are fewer calculations involved, and you don’t need to work out your total motor expenses across the year. However, there a few things you need to take note of:

  • Once you have decided on a method, you need to stick with it until the vehicle is replaced.
  • If your annual turnover for your business exceeds the VAT threshold (set at £85,000 for a 12 month period ending 2020/21), you need to use the first method.
  • You can’t use the second method if you bought your vehicle with a capital allowance.

Click here for more info on calculations and expenses.

Record keeping requirements

It’s crucial that you keep an accurate record to back up any mileage claim. Therefore, you will need to keep a detailed mileage log that records the date and location of each business trip and the total number of business miles driven. To make tracking your mileage easier and less tedious, you could try using Apps, such as MileIQ.

How can we help?

Here at Cooper Accounting, we can assist you further with your mileage claim, either in isolation or as part of a self-assessment return. We offer bespoke guidance and advice to sole traders, partnerships and small businesses.

Get in touch to set up an informal consultation.