What Can I Claim If I Use My Car for Business

Introduction

Using your personal car for business can be expensive, but the tax system allows you to recover some of those costs. You can claim either simplified mileage rates or actual running costs, but not both.

The method you choose depends on whether you are self employed, a limited company director, or an employee using your own vehicle for work. The key rule is that you can only claim for journeys made wholly and exclusively for business purposes.

What counts as business mileage

HMRC defines business mileage as journeys made for work, not including private or personal trips.

You can claim for:

Travelling to meet clients or suppliers.

Visiting job sites or temporary workplaces.

Delivering goods or materials.

Business errands such as banking or collecting stock.

You cannot claim for:

Your normal commute between home and your regular workplace.

Personal journeys or detours.

Example

If you drive 5,000 miles a year to visit clients, but your total mileage is 8,000 miles including personal trips, only the 5,000 business miles qualify for tax relief.

Option 1: Claiming mileage allowance (simplified expenses)

HMRC’s simplified expenses system allows self employed people to claim a flat rate per mile instead of recording individual vehicle costs.

The approved mileage rates are:

45p per mile for the first 10,000 business miles in a tax year.

25p per mile for each additional mile.

These rates cover all running costs, including fuel, insurance, maintenance, and depreciation. You cannot claim any other car expenses if you use this method.

Example

A self employed consultant drives 8,000 miles for business in one year.
8,000 miles × 45p = £3,600 claimable as a business expense.

If they drove 12,000 miles, they could claim:
10,000 × 45p + 2,000 × 25p = £5,000 in total.

This method is simple, avoids detailed record keeping, and works best for sole traders with moderate mileage.

Option 2: Claiming actual car running costs

Instead of using mileage rates, you can claim a proportion of your actual running costs if you use your car partly for business and partly for personal journeys.

You must keep records of:

Fuel and oil costs.

Insurance.

Vehicle tax and MOT.

Repairs and servicing.

Lease payments or depreciation.

You can then calculate the percentage of business use based on your mileage.

Example

Your total annual car expenses are £6,000, and 60 percent of your driving is for business. You can claim 60 percent of £6,000, or £3,600, as a deductible business expense.

This method requires more detailed record keeping but can be more accurate for high-cost vehicles or high mileage.

Company directors and limited companies

If you operate as a limited company, you can claim mileage for business trips made in your personal car at HMRC’s standard rates (45p per mile for the first 10,000 miles, 25p thereafter). The company reimburses you for these expenses, and the payments are tax free.

If the company owns the car and provides it for personal use, it becomes a company car and is treated as a benefit in kind (BIK). This means both the company and the director may owe additional tax, depending on the car’s value and emissions.

Most small company directors find it more tax efficient to use their own vehicle and claim mileage rather than having a company car.

Employees using their own car for work

Employees can claim Approved Mileage Allowance Payments (AMAPs) at the same HMRC rates as the self employed.

If your employer reimburses you less than the approved rate, you can claim the difference as tax relief. If they pay more, the excess amount counts as taxable income.

Example

Your employer reimburses you 30p per mile for 5,000 business miles. HMRC’s approved rate is 45p, so you can claim tax relief on 15p per mile.
5,000 × 15p = £750 additional deductible mileage.

Record keeping for mileage claims

HMRC requires accurate records of your business journeys to support your claim. Your mileage log should include:

Date of each trip.

Start and destination addresses.

Purpose of the journey.

Mileage covered.

You can record mileage manually in a logbook or use smartphone apps such as MileIQ, Driversnote, or QuickBooks mileage tracker.

Keeping detailed records ensures you can justify your claims if HMRC requests evidence during an audit.

Claiming car parking and tolls

Parking fees and tolls incurred during business journeys can also be claimed as separate expenses. However, you cannot claim fines or penalties for parking or speeding, even if they occur while driving for work.

Electric vehicles

If you use an electric vehicle for business, you can still claim mileage at the standard HMRC rates or claim a proportion of running costs.

If you charge the vehicle at home, you can include a share of your electricity bill based on business use. For company-owned electric vehicles, there are additional tax advantages due to low benefit-in-kind rates.

VAT considerations

If you are VAT registered, you may be able to reclaim VAT on fuel and vehicle expenses depending on your method:

If you use mileage rates, you can reclaim VAT on the fuel element using HMRC’s published advisory rates.

If you claim actual expenses, you can reclaim VAT on the business proportion of fuel and maintenance costs, provided you have valid VAT receipts.

You cannot reclaim VAT on private mileage.

Example scenario

Emma is a self employed surveyor who drives 9,000 business miles in a year. She chooses the simplified mileage method and claims 9,000 × 45p = £4,050.

She keeps a log of her journeys with dates, clients, and mileage. Because she uses the flat-rate method, she does not need to record fuel or servicing costs separately. Her accountant deducts the £4,050 from her taxable profit, reducing her overall tax bill.

Common mistakes to avoid

Claiming for commuting to your regular workplace.

Mixing business and personal mileage without clear records.

Forgetting to record journey details at the time of travel.

Claiming both mileage and actual costs for the same car.

Accurate and consistent record keeping is key to claiming the correct amount and avoiding HMRC challenges.

Conclusion

If you use your car for business, you can claim tax relief through mileage allowances or a share of your actual car costs. The right method depends on how much you drive, the type of business you run, and whether you are self employed, an employee, or a company director.

Whichever method you choose, keep detailed records of all journeys and expenses to support your claim. If you are unsure which approach will save you more tax, an accountant can review your situation and help you maximise your allowable deductions while staying fully compliant with HMRC rules.