Mileage vs Fuel Claims

The two ways to claim vehicle costs

There are two ways to claim vehicle costs as a sole trader: the approved mileage rate method and the actual cost method. Most sole traders use the mileage rate because it is simpler and requires less record-keeping.

The mileage rate gives you 55p per mile (up to 10,000 miles) with no need to keep fuel receipts. The actual cost method lets you claim fuel, insurance, maintenance and depreciation, but requires detailed records of every expense.

Mileage rate method (simplified expenses)

You multiply your business miles by the approved rate. The rate covers all vehicle costs — fuel, insurance, maintenance, road tax and depreciation. No need to keep individual receipts.

This is the simplest method and is usually the best choice for sole traders who drive a moderate amount (up to about 15,000 business miles per year).

• 55p per mile for first 10,000 miles, 25p per mile above
• No fuel receipts needed
• No need to track insurance, maintenance or depreciation
• Simple to calculate and report on Self Assessment

Actual cost method

You claim the business portion of all vehicle costs: fuel, insurance, maintenance, road tax and depreciation (capital allowances). You need to keep receipts for everything and calculate the business-use percentage.

This method can be more beneficial if you drive a lot of miles (15,000+), have an expensive vehicle, or high fuel and maintenance costs. But the record-keeping is significantly more complex.

• Claim actual fuel, insurance, maintenance and depreciation
• Must keep all receipts and invoices
• Calculate business-use percentage (e.g. 70% business)
• More complex but potentially higher claim for high-mileage drivers

Which should you choose?

For most sole traders, the mileage rate is the better choice. It is simpler, requires less record-keeping, and the 55p rate is generous enough to cover most vehicle costs.

If you drive a high-mileage vehicle (15,000+ business miles) or have very high fuel costs, the actual cost method may give a higher claim. But you should calculate both to be sure.

MileageCalendar supports the mileage rate method automatically. If you want to use the actual cost method, you can still use the app to track your business-use percentage.