Mileage or Actual Costs? The Vehicle Claim, and What Changed in April
The simplified rate rose from 45p to 55p a mile on 6 April 2026. For a high-mileage driver that is worth a thousand pounds of extra claim — and it changes which method wins.
The simplified mileage rate went up on 6 April 2026, from 45p to 55p per business mile for the first 10,000 miles. If you drive for a living that is the most consequential number in your tax return, and it just moved in your favour.
The rates
| Vehicle | Rate |
|---|---|
| Cars and goods vehicles, first 10,000 business miles | 55p per mile |
| Cars and goods vehicles, above 10,000 miles | 25p per mile |
| Motorcycles | 24p per mile, no step |
The 10,000-mile count is per tax year and resets each 6 April. It is counted per person, not per vehicle, so swapping cars mid-year does not restart it.
What the change is worth
A driver covering 25,000 business miles claims £9,250 under the new rates: 10,000 at 55p, then 15,000 at 25p. Under the old 45p rate the same mileage produced £8,250. That is £1,000 of additional deduction — worth roughly £260 in tax and National Insurance to a basic rate taxpayer, for doing nothing differently.
The other method
Instead of the flat rate you can claim the real costs: fuel, insurance, road tax, servicing, repairs, breakdown cover — apportioned to business use — plus capital allowances on the vehicle itself. That last part is the reason actual costs sometimes win by a distance. The mileage rate is deemed to cover depreciation, so choosing it means giving up capital allowances entirely.
Actual costs tend to be better for a newer, more expensive or heavily depreciating vehicle, and for anyone whose business mileage is modest relative to the car's value. Mileage tends to be better for an ordinary economical car doing a lot of miles.
The decision sticks
Once you claim the simplified rate for a vehicle, you must keep using it for that vehicle for as long as you own it. You cannot alternate year to year to take whichever is higher. The choice is genuinely worth modelling in the first year of a vehicle, and it is a five-minute job for an accountant with your figures in front of them.
Keep the log
Whichever method you use, the claim rests on evidence of business miles. Date, route, purpose, distance. A note made as you go is fine; a single figure produced at the year end is what enquiries are made of. If you are already photographing receipts through our app, adding the mileage takes seconds and means the year end is a matter of totalling rather than remembering.
Getting help with this
AJH Accountants handles expenses for clients across the UK. We deal with HMRC, tell you what you can claim, and file on time, so nothing rests on you remembering a deadline. See how the service works, ask for a fixed-fee quote, or call the office on 01204 840303.
Originally published at ajhaccountant.co.uk/blog/mileage-or-actual-running-costs-vehicle-expenses.