The Accountancy Partnership, a leading UK accountancy firm specialising in sole traders and limited companies, reveals what the mileage allowance increase means for the self-employed.
A step in the right direction
The mileage allowance increasing from 45p to 55p is one of the most practical real-world changes for self-employed people. The rate has been frozen since 2011, and could mean significant savings when claiming back expenses.
The catch:
The rate change only applies to people who use their personal car or van for work. It means self-employed people from trades to driving instructors and dog walkers can claim up to £1,000 more in allowable mileage for the first 10,000 miles.
Perhaps not far enough:
The rate remains unchanged at 25p for any mileage above 10,000 miles. After a 15-year wait for policy change, this may leave some frustrated.
What the savings could mean
Lee Murphy, Managing Director at The Accountancy Partnership, explains why the uplift is really important for self-employed people and what mileage rate savings could mean:
“We’ve seen lots about what this change means for employees, but we really want to highlight what this means for people who are self-employed. The same benefits apply.
“Many self-employed people like tradespeople will rely on their personal vehicle to drive between jobs, be it a van or a car. They’ve likely been absorbing persistent cost of living increases associated with that vehicle, such as rising fuel and maintenance fees.
Potential cash flow relief
“The change in allowance marks a step in the right direction, something that can make a practical and meaningful difference to their taxable profits. As small as it sounds, that 10p extra can provide cash flow relief and increase financial security on something relied upon for work.
Backdated relief
“What’s really useful to see is that the new 55p rate can be backdated to April 2026. We advise our clients to keep accurate mileage records, so it’s great to know they’re able to receive the full benefit of the change this tax year, not next.
Tips for claiming self-employed mileage expenses
Helping to clear up any confusion around the latest mileage allowance update, Lee Murphy reveals his tips for how self-employed people hoping to understand and benefit from the government update:
Keep accurate mileage records
“HMRC may ask for evidence to support vehicle expense claims, such as mileage. Keep records accurate and well organised for at least six years after the end of the relevant tax year.”
Remember to back date
“Don’t forget the increase in mileage allowance is backdated to the beginning of the tax year (April 2026). Use your mileage records to claim the full benefit of the updated policy with the new rates.”
Ensure you’re using a personal vehicle
“The mileage allowance increase only applies to the use of personal vehicles for work. It may not apply in the same way if you are hiring a vehicle or if you own a vehicle through your limited company.”
Don’t include personal trips
“It’s important to make a clear distinction between a personal or business trip. Business miles must be exclusively made up of travel for business purposes. You can’t include commuting to work.”
Check you’re using the most efficient method to claim
“It’s up to you whether you work out your claim using the simplified flat-rate per mile method, or by calculating the actual costs such as fuel, maintenance, and insurance. If the actual costs are higher than what you’d get back claiming the rate per mile, use those instead.”
