When it comes to claiming travel expenses on your tax return, many self-employed people get stuck on one big question: Should I claim mileage or fuel receipts?
It’s a fair question. Picking the right method can make a big difference to how much tax you pay and how much admin you take on. In this post, we’ll break down both options, look at what HMRC allows, and help you decide what’s best for your business. Let’s make it simple.
What are your options?
If you use your personal vehicle for work, you have two ways to claim back business costs.
1. Claim business mileage (the simplified method)
This is the straightforward route. You keep a log of your business miles and claim a fixed rate per mile:
45p per mile for the first 10,000 miles in a tax year
25p per mile after that
These rates cover everything like fuel, insurance, MOT, servicing, and wear and tear.
2. Claim actual running costs (using fuel receipts)
This is the more detailed route. You keep all your receipts for fuel and other car-related costs like insurance, repairs, and servicing. You then claim the business-use percentage of those costs based on your mileage records.
So, mileage or fuel? What’s better?
Here’s the short answer:
For most sole traders and small business owners, mileage is easier and just as tax efficient.
Let’s dig into why.
When mileage is better
Mileage claims are usually the better option if:
You use your own car or van for work
You don’t want to keep receipts or run calculations
You drive less than 10,000 business miles a year
Your vehicle is cheap to run and maintain
Why this works:
Easy to record
No need to track costs or fuel receipts
Fully accepted by HMRC
Keep in mind that once you use mileage for a vehicle, you must stick with that method for that vehicle until you replace it.
When fuel receipts might save you more
Claiming actual running costs could be better if:
You drive a lot for work
You have a large or older vehicle with high running costs
You already keep detailed receipts and mileage logs
The vehicle is owned by your limited company
This method may result in a bigger tax deduction, but only if your business use and running costs are high enough to beat the mileage allowance.
What to watch out for:
You must keep every receipt
You still need a mileage log to calculate your business use
It takes more time and effort to manage
This method can work well for high-mileage drivers, but the extra admin can outweigh the benefits for smaller businesses.
What does HMRC say?
HMRC allows both methods. You can pick whichever works best for your business. They do encourage the simplified method for sole traders, as it is easier to manage.
You can use their simplified expenses checker to see what would work out best in your case.
Important: once you choose a method for a vehicle, you must stick with it until you replace that vehicle.
Can I use MileIQ to track mileage?
Yes. MileIQ is a great tool to help you keep a reliable mileage log without the hassle.
It runs in the background on your phone and automatically tracks every drive. You then swipe to mark each trip as business or personal, and it generates a clear report you can use for your tax return.
Why people like MileIQ:
Tracks every trip automatically
Easy swipe to classify drives
HMRC-friendly mileage reports
Saves loads of time
You can download your reports at the end of the year or each month. Just make sure you keep on top of tagging your trips, so nothing gets missed or mislabelled.
Quick comparison
| Feature | Mileage | Fuel Receipts |
|---|---|---|
| Easy to use | ✅ | ❌ |
| Covers all vehicle costs | ✅ | ❌ |
| Needs receipts | ❌ | ✅ |
| Good for low-mileage drivers | ✅ | ❌ |
| More accurate for high costs | ❌ | ✅ |
| HMRC approved | ✅ | ✅ |
Final tips
Always keep a mileage log, even if you claim fuel receipts
Use an app like MileIQ to make tracking easier and more accurate
If you drive less than 10,000 miles a year, mileage claims are often simpler and just as generous
If you drive long distances or have high running costs, do the maths
Stick with the same method for each vehicle until you replace it
Wrapping up
For most self-employed people, claiming mileage is the easiest and most reliable method. It saves time, reduces paperwork, and gives you a fair deduction without overcomplicating your tax return.
Fuel receipts can work if your costs are high or you do lots of driving, but the admin load is heavier. Whichever method you choose, keep good records and be ready to back up your claim if HMRC ever asks.
And if you’re unsure which method will save you more, or your situation is a bit more complicated, it’s worth speaking to an accountant. A good accountant can quickly run the numbers, spot extra savings, and take the stress out of self-assessment altogether.
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