A UK sole trader's guide to claiming van, car and motorcycle costs against your tax bill in 2026: the two HMRC methods, what counts, what doesn't, and how Making Tax Digital for Income Tax changes the record-keeping rules from 6 April 2026.
Key Takeaways
- From 6 April 2026, sole traders with qualifying income over £50,000 must use Making Tax Digital for Income Tax and keep digital records of business expenses.
- HMRC gives you two ways to claim vehicle costs: simplified expenses (45p per mile for the first 10,000 business miles, 25p after) or actual costs plus capital allowances.
- Once you pick a method for a vehicle, you keep using it for that vehicle for as long as you use it in your business.
- Tolls, parking and congestion charges for business trips are claimable on top of the mileage rate.
- Commuting from home to a regular place of work is not business mileage, even for the self-employed.
- A contemporaneous mileage log is the single strongest piece of evidence in an HMRC enquiry.
If you drive for work as a sole trader, sub-contractor or one-person limited company, your vehicle is probably one of your biggest claimable costs. Get the tracking right and you pay the right amount of tax. Get it wrong and you either overpay by hundreds of pounds a year or claim too much and face a correction with penalties if HMRC looks closely.
Vehicle expenses for self-employed drivers sound straightforward until you try to reconcile a year of fuel, servicing, insurance and private miles at the end of the tax year. This guide walks through the two methods HMRC allows in 2026, what you can and cannot claim under each, and the record-keeping rules that tighten sharply when Making Tax Digital for Income Tax turns on in April 2026.
The two HMRC methods: simplified expenses or actual costs
You have a binary choice per vehicle. Either claim a flat rate per business mile (simplified expenses) or claim your actual running costs plus capital allowances on the vehicle itself. You cannot mix the two for the same vehicle in the same year, and once you start with simplified expenses for a car, van or motorcycle, you must keep using that method for that vehicle as long as you use it in your business.
Simplified expenses covers petrol, diesel, servicing, insurance, repairs, MOT and depreciation, all rolled into the flat rate. Actual costs breaks each of those out and asks you to apportion every one by the business-use percentage of the vehicle.
Simplified expenses: what the flat rate covers
The 2025 to 2026 HMRC Approved Mileage Allowance Payment (AMAP) rate is 45p per mile for the first 10,000 business miles per tax year and 25p a mile after that. Motorcycles are a flat 24p a mile. Bicycles (yes, really) are 20p a mile. These rates are set by HMRC and apply across employees and the self-employed on the simplified method.
That single figure is meant to cover everything the vehicle costs you in running it. Fuel, servicing, tyres, MOT, repairs, insurance, road tax, breakdown cover, depreciation. You do not list them separately on your tax return. You list business miles multiplied by the rate, and that is your vehicle running-cost deduction.
What you can still claim on top: tolls, congestion charges and parking paid for a specific business journey. These are not baked into the mileage rate; they go in as separate allowable expenses. Train fares, bus fares and taxis for business trips where you did not use your own vehicle also go in separately.
What you cannot do with simplified expenses: claim capital allowances on the vehicle. The flat rate is designed to fold depreciation into the per-mile figure, so trying to claim the purchase price (or writing-down allowance) on top is not allowed.
Actual costs: what it gets you, and why it gets complicated
Actual costs usually gives a bigger deduction for expensive vehicles driven lots of business miles, because it lets you claim a share of the purchase price through capital allowances. The trade-off is the record-keeping. Every fuel receipt, every service invoice, every insurance premium: kept, totalled, and split by business-use percentage. If your van is used 80% for work and 20% for private trips, you claim 80% of each running cost.
For the vehicle itself, you claim capital allowances. For cars, the rate depends on CO2 emissions: zero-emission cars still qualify for a 100% first-year allowance on new purchases until 5 April 2026 for Income Tax, falling back to writing-down allowances after. The main writing-down allowance rate drops from 18% to 14% for expenditure incurred on or after 1 January 2026. A new 40% first-year allowance for general plant and machinery comes in on the same date but excludes cars.
Vans are treated differently from cars. A van bought for business use can qualify for the Annual Investment Allowance (AIA) or full expensing if you are a company. That is a much more generous deduction in the year of purchase than the writing-down allowance stream cars are stuck with.
Business miles versus private miles: the bit that gets people caught
Business miles are miles driven for work between your work locations, or from your home to a temporary workplace. The commute from home to a regular place of work is private, not business. If you are a self-employed plumber based at home and you drive to a client's house, that is business mileage. If you are self-employed but report daily to a fixed depot someone else owns, the journey from home to that depot is ordinary commuting.
Detours for personal errands do not count. A stop at the supermarket on the way back from a job is private. HMRC's guidance and case law are consistent on this: business mileage is the wholly and exclusively business portion of the journey, no more.
Keep a per-trip log with date, start postcode, end postcode, purpose and miles. A spreadsheet works. A dedicated app works better, because it timestamps the entry and sits inside your evidence pile if an enquiry lands.
What Making Tax Digital for Income Tax changes from 6 April 2026
From 6 April 2026, if your qualifying income from self-employment and property exceeds £50,000, you must use Making Tax Digital for Income Tax Self Assessment. That means digital record-keeping through HMRC-compatible software, quarterly updates sent to HMRC, and a final declaration at year-end that replaces the old Self Assessment return for in-scope traders.
HMRC expects roughly 780,000 people to join the MTD for Income Tax service from April 2026, with a further 970,000 joining from April 2027 when the threshold drops to £30,000. From 6 April 2028, sole traders and landlords with qualifying income over £20,000 in the 2026 to 2027 tax year will also need to use Making Tax Digital for Income Tax.
For vehicle expenses, this means two things. First, paper mileage books stop being a sufficient record on their own; the underlying data has to sit in software that can report quarterly to HMRC. Second, receipts for fuel, servicing, insurance and repairs need to be attached to digital records, not stuffed in a shoebox and totalled the following January.
If you are currently under the £50,000 threshold, MTD for Income Tax is not yet mandatory for you. But the direction of travel is clear: the £20,000 floor arrives in 2028. Starting digital now is cheaper than retrofitting digital later.
A worked example: Transit-driving electrician
You run a one-person electrical contracting business. You drive a 2023 Ford Transit Custom, bought second hand for £18,000 in January 2025. This tax year you cover 22,000 business miles and 6,000 private miles. Total mileage 28,000; business-use percentage roughly 79%.
Simplified expenses route: 10,000 miles at 45p is £4,500, plus 12,000 miles at 25p is £3,000. Your mileage deduction is £7,500. Add £340 of business parking and tolls and your vehicle deduction is £7,840. Clean, simple, no depreciation calc required.
Actual costs route: £2,100 fuel, £950 insurance, £720 servicing and MOT, £420 repairs, £290 road tax, £180 breakdown cover. Total running cost £4,660. Apply 79% business use: £3,681. Then add capital allowances on the Transit: AIA in the year of purchase already used, so this year's deduction is writing-down allowance on the remaining pool balance. Say the tax written-down value is £11,000; WDA at 18% (reducing to 14% from 1 January 2026, so part-year apportioned) gives roughly £1,800. Total deduction £5,481.
In this worked example the simplified method gives a £7,500 deduction and the actual-cost method gives £5,481. Mileage-heavy one-vehicle businesses tend to do better on simplified. Lower-mileage businesses with an expensive vehicle often do better on actual. Run both calculations once before committing.
Records that stand up in an HMRC enquiry
HMRC can open a self-assessment enquiry up to four years after the filing deadline as a matter of routine, six years if they suspect carelessness and twenty years in cases of suspected deliberate understatement. Your vehicle records need to survive that window.
The minimum set of evidence: a contemporaneous mileage log (date, start, end, purpose, distance, method), receipts for tolls and business parking, and either the fuel/service/insurance receipts (actual costs) or a clear note of the method chosen (simplified). If you switched from actual to simplified, the date and reason should be on file. If you have more than one vehicle, each has its own record set and method.
The biggest single error in HMRC enquiries on vehicle expenses is reconstructed mileage. A log built at year-end from memory, with round numbers and suspicious consistency, is the kind of record an inspector opens first. A log built trip-by-trip in the moment is the kind they tend to accept.
Common mistakes to avoid
Claiming commuting as business mileage. Home to a regular depot is not business, however much it feels like it.
Mixing methods on one vehicle. Pick simplified or actual for each vehicle and stick with it for the life of that vehicle in the business.
Forgetting the 10,000-mile taper. Simplified expenses is 45p a mile only for the first 10,000 business miles in the tax year. Mile 10,001 onwards drops to 25p. High-mileage drivers who quote "45p a mile" as the headline are leaving accuracy on the table.
Claiming capital allowances alongside simplified expenses. If you are on simplified for a vehicle, capital allowances on that vehicle are off the table. The flat rate already covers depreciation.
Paper-only records after April 2026. If MTD for Income Tax applies to you, a paper mileage book alone will not meet the digital record-keeping test. The data needs to be in compatible software.
How Autodue handles vehicle expenses for sole traders
Autodue captures mileage as you drive, categorises expenses from scanned receipts, and stores insurance and service documents in one place. Every expense is timestamped and keyed to the vehicle and the driver, so the audit trail is built as you go, not reconstructed at year-end.
Every vehicle tracked in Autodue carries its own expense ledger: fuel, servicing, insurance, MOT, repairs, tolls and parking, each with a receipt attachment. The mileage tool records business versus private miles and totals per-vehicle for the tax year, ready to drop into either the simplified or the actual-cost calculation.
Our 14 Vehicle Expense Categories Every UK Fleet Should Track guide walks through the full list, if you are coming from a lump-sum "fuel and servicing" bucket and want to split the data so it actually tells you something. For the HMRC AMAP rates in full, see our HMRC Mileage Allowance 2026 post.
The bottom line
The rule is simple: pick a method per vehicle, record the mileage as it happens, keep receipts for the extras you can still claim on top, and start the digital record-keeping shift now rather than in April 2026. Sole traders who run the numbers both ways once tend to find the better method and leave it alone. Sole traders who guess tend to overclaim, underclaim or leave themselves exposed to an enquiry they cannot evidence their way out of.
Track every business mile and every vehicle expense automatically with Autodue. iOS | Android | See expense tracking | See mileage tracking
Sources: HMRC: Simplified expenses for self-employed vehicles · HMRC: Travel mileage and fuel rates and allowances · HMRC: Expenses if you're self-employed: car, van and travel · HMRC: Making Tax Digital for Income Tax for sole traders and landlords · HMRC: HS252 Capital allowances and balancing charges 2026 · HMRC: New first-year allowance and main rate of writing-down allowances