What Can I Claim If I Use My Car for Business

At Towerstone Accountants we provide specialist personal tax services, for self employed, and individuals across the UK. This article has been written to explain What can I claim if I use my car for business, in clear practical terms, so you understand how personal tax and Self Assessment rules apply in real situations. Our aim is to help you stay compliant, avoid costly mistakes, and make confident tax decisions.

Using your own car for business is incredibly common, whether you are self employed, a company director, or someone who occasionally travels for work. It is also one of the areas where I see the most confusion, the most missed claims, and the most accidental mistakes.

From my experience as an accountant in practice, people usually fall into one of two camps. Some assume they can claim far more than the rules allow and end up worried about getting it wrong. Others assume it is not worth claiming anything at all and quietly miss out on tax relief they are absolutely entitled to.

The reality sits somewhere in the middle. You can claim for business use of your car, but how you do it depends on your circumstances and the method you choose. In this article I want to explain the rules clearly, in plain English, and based on real UK guidance and what actually works in practice.

I will cover what counts as business mileage, the different claiming methods, what you can and cannot include, how records should be kept, and the most common traps I see people fall into.

What HMRC Counts as Business Use of a Car

Before looking at what you can claim, it is essential to understand what HMRC considers business use.

Business mileage is travel that is wholly and exclusively for work. This typically includes travelling to see clients, travelling between work sites, attending meetings, visiting suppliers, or travelling to temporary workplaces.

What it does not usually include is ordinary commuting. Travel from your home to a permanent place of work is treated as private travel, even if you are self employed.

This is one of the most important distinctions and one I explain regularly to clients. Just because a journey feels work related does not automatically mean it is allowable.

If You Are Self Employed, The Two Main Ways to Claim

If you are a sole trader or in a partnership, HMRC gives you two main options for claiming car costs. You must choose one method per vehicle and stick with it.

The Mileage Allowance Method

This is the simplest and most commonly used method.

Under this approach you claim a fixed amount per business mile driven.

The current HMRC rates are:.

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

• 25p per mile for any business miles over 10,000

These rates are designed to cover all running costs of the vehicle, including fuel, insurance, servicing, repairs, road tax, and depreciation.

From a practical point of view, this method is popular because it is simple, low risk, and easy to explain if HMRC ever asks questions.

All you need is a mileage log showing the date, the purpose of the journey, and the miles driven.

The Actual Cost Method

The alternative is to claim a proportion of the actual running costs of the car.

This can include:.

• Fuel

• Insurance

• Servicing and repairs

• Road tax

• MOT

• Breakdown cover

• Lease costs, subject to restrictions

• Capital allowances on the vehicle

You then apportion these costs between business and private use, usually based on mileage.

For example, if 60 percent of your total mileage is for business, you can claim 60 percent of the allowable costs.

This method can result in a higher claim in some cases, particularly for expensive vehicles or high business use, but it requires far more record keeping and consistency.

In my experience, unless business mileage is very high, the mileage allowance method is often the more sensible choice.

If You Are a Company Director or Employee

The rules are different if you are using your personal car for company business.

In this case, the company can reimburse you for business mileage at HMRC approved rates without creating a tax charge.

The rates are the same as those used for self employed mileage claims:.

• 45p per mile for the first 10,000 business miles

• 25p per mile thereafter

The reimbursement is paid by the company to you and is treated as an allowable expense for the company.

Importantly, this is not income for you personally and does not attract income tax or National Insurance when paid at or below HMRC rates.

This is one of the most straightforward and tax efficient ways for directors to recover the cost of using their own car for work.

What Counts as Business Mileage for Directors

For directors, business mileage usually includes travel to clients, suppliers, meetings, and temporary workplaces.

Travel to a permanent workplace can be more complex, particularly if you regularly attend the same office or site. This is an area where getting advice matters, because the definition of a permanent workplace can change depending on frequency and duration.

Fuel Costs and Fuel Receipts

One of the most common mistakes I see is people trying to claim fuel receipts separately when they are already using the mileage allowance method.

You cannot do both.

If you claim mileage at HMRC rates, fuel is already included. Claiming fuel receipts on top would be double counting.

If you use the actual cost method, fuel receipts are essential, because fuel is part of the running costs being apportioned.

Consistency is key here. HMRC is much more comfortable with simple clear methods than mixed approaches.

Parking, Tolls, and Congestion Charges

Certain costs can be claimed on top of mileage or running costs.

These include:.

• Parking fees for business journeys

• Road tolls

• Congestion charges where incurred for business travel

What you cannot claim are parking fines or penalties, even if they arise while working.

What You Cannot Claim

Understanding what is not allowable is just as important as knowing what is.

Generally, you cannot claim:.

• Ordinary commuting to a permanent workplace

• Parking fines or speeding tickets

• The private element of car costs

• Full car purchase cost if using mileage method

Trying to push these boundaries is where HMRC challenges usually arise.

Buying a Car Through the Business

If you operate through a limited company, buying a car through the company is a separate and more complex decision.

Company owned cars can trigger benefit in kind tax, which depends on the car’s emissions and list price. In many cases this makes company cars inefficient for tax purposes, particularly for petrol or diesel vehicles.

Electric cars can be more favourable, but this decision should always be reviewed carefully before purchase.

For many directors, using a personal car and claiming mileage is simpler and more tax efficient.

Record Keeping, What HMRC Expects

HMRC does not expect perfection, but it does expect reasonable records.

At a minimum, you should keep:.

• A mileage log

• Dates and destinations

• Business purpose of each journey

This can be done using an app, a spreadsheet, or even a notebook, as long as it is consistent.

For actual cost claims, you should also keep copies of bills and a clear calculation showing how business use has been worked out.

Common Mistakes I See

From my experience, the most common issues are:.

• Claiming commuting as business mileage

• Switching methods for the same car

• Poor or non existent mileage records

• Claiming fuel twice

• Overestimating business use percentages

None of these are usually deliberate, but they can cause problems if HMRC reviews the return.

My Professional View

For most people, the mileage allowance method offers the best balance of simplicity and tax efficiency. It is easy to apply, easy to explain, and rarely challenged.

There are situations where the actual cost method makes sense, but those tend to be the exception rather than the rule.

The most important thing is choosing a method that fits your situation and sticking to it consistently.

Key takeaways

Using your car for business should not feel like a grey area filled with guesswork.

If you understand what counts as business travel, choose the right claiming method, and keep basic records, claiming car expenses is straightforward and entirely legitimate.

When done properly, it reduces your tax bill fairly and sensibly, without creating stress or risk.

You may also find our guidance on How do I record mileage and travel expenses, and What expenses can I claim if I am self employed, helpful when reviewing related personal tax questions. For a broader overview of Self Assessment deadlines, reporting, and obligations, you can visit our self assessment guidance hub.