The Complete Guide to Business & Self-Employed Driving in the UK (2026)

Driving for work adds a whole separate layer of rules and costs on top of everything an ordinary driver deals with — mileage claims, van-specific tax rules, and city driving charges that can add up fast when you're on the road every day rather than occasionally. This guide walks through the whole picture for sole traders, employees who drive for work, and van owners, with the relevant calculator linked at each stage.

1Claiming mileage the right way

HMRC's Approved Mileage Allowance Payments (AMAP) rates have been unusually stable for over a decade: 45p per mile for the first 10,000 business miles in a tax year, dropping to 25p per mile after that. Motorcycles are a flat 24p per mile, and bicycles a flat 20p per mile, with no mileage threshold reduction. The 10,000-mile threshold resets every tax year, running 6 April to 5 April.

One detail a lot of people miss entirely: if you carry a colleague who's also on a business journey, you can claim an extra 5p per mile per passenger, on top of your own mileage rate.

📋 Use the HMRC Business Mileage Calculator →

2Your own car, a company car, or a van?

If you drive your own car for business, mileage claims are how you're compensated. If you drive a company car instead, the system is entirely different — you generally can't claim AMAP mileage in the same way, since your employer typically reimburses fuel separately, often via Advisory Fuel Rates that are reviewed quarterly by HMRC. It's genuinely a different system, not just the same rate under a different name — check current rates directly with HMRC rather than assuming they match the mileage figures above.

If you're provided a company car for both business and any private use, that triggers Benefit-in-Kind tax, calculated differently again.

🚘 Use the Company Car Tax (BIK) Calculator →

If you're weighing up buying a vehicle for the business rather than using mileage claims on a personal car, the finance decision matters just as much as it would for a personal purchase.

💳 Use the PCP & HP Car Finance Calculator →

3Van-specific rules you need to know

Vans — Light Goods Vehicles up to 3,500kg — are taxed under a completely different VED system to cars. There's no CO2-based first-year rate the way cars have had since 2017; instead, most vans pay a single flat standard rate, with a reduced rate available for a specific window of Euro 4/5 compliant vans.

🚐 Use the Van Road Tax Calculator →

4City driving costs when driving is your job

For anyone who drives into cities regularly for work — tradespeople, delivery drivers, sales reps — congestion charges and parking fines can quietly become one of the largest ongoing costs of the job, precisely because they're incurred daily rather than as an occasional inconvenience.

🏙️ Use the Congestion Charge Calculator → 🅿️ Use the Parking Fine (PCN) Calculator →

A Penalty Charge Notice paid within the 14-day discount window costs half of what it does if left — for a driver picking up occasional parking notices as a routine part of city work, that discipline alone can meaningfully affect the annual total.

5Fuel and EV costs at business mileage levels

Fuel cost matters more, proportionally, for high-mileage business drivers than for an average personal driver, simply because the same per-mile difference multiplies across a much larger number of miles each year. This is exactly where the choice between petrol, diesel, and electric has the biggest financial impact.

⛽ Use the Fuel Cost Calculator → ⚡ Use the EV vs Petrol Calculator →

6Record-keeping mistakes that cost you at tax time

The most common issue HMRC queries around mileage claims isn't fraud — it's poor record-keeping. A mileage log needs to show the date, destination, purpose, and miles travelled for each business journey, kept contemporaneously rather than reconstructed months later from memory at tax return time.

• Mixing business and personal journeys without clearly separating them in your log
• Estimating mileage retrospectively instead of recording it at the time — HMRC can and does query implausible or round-number-heavy logs
• Claiming the mileage rate and separate fuel receipts for the same journeys — as covered above, this is double-claiming
• Switching between Simplified Expenses and actual costs for the same vehicle without understanding the restriction on doing so

7Self-employed vs employed: how claiming differs

If you're self-employed, you claim mileage through Self Assessment, choosing between Simplified Expenses (the flat mileage rate covered above) or actual costs — a proportion of your total vehicle running costs based on your genuine business-use percentage. You choose one method per vehicle, and once you've chosen actual costs for a specific vehicle, HMRC generally expects you to continue with that method for that vehicle rather than switching back and forth.

If you're employed and use your own car for work, but your employer pays you less than the approved mileage rate — or nothing at all — you can claim Mileage Allowance Relief on the shortfall through Self Assessment or a P87 form. This is a genuinely underclaimed benefit; a lot of employees who receive a lower "car allowance" style payment don't realise they can claim the difference back as tax relief.

Frequently asked questions