Mileage Allowance Vs Actual Costs









Having been asked by a few of our users “Which is the best method for calculating their accounts, mileage allowance or actual costs?”, we’ve put together this blog post to help you.

The first thing you should know is there is no universal “one size fits all” answer.  Circumstances vary from one driver to the next; depending on the age of the vehicle, when it was purchased, miles driven etc.


Check if simplified expenses could save your business money

HMRC have provided a really useful
simplified expenses checkertool.


If you’re a sole trader or partnership there are 2 ways you can calculate business expenses for vehicles, working from home and living on your business premises. You can use simplified expenses or calculate your expenses by working out the actual costs.


Use this checker to work out which method is best for you.


What you need to know:

You’ll be asked to make estimates about some of your business expenses.

This tool:

  • doesn’t give exact figures to use in your tax return – it tells you which way of calculating expenses might save you money
  • can only give an answer for one vehicle at a time – if you have several vehicles, start at the beginning for each vehicle


Who can’t use this tool:

Don’t use this tool for vehicle expenses if:

  • you use cash basis and you’ve already deducted your vehicle as a capital cost
  • you’re claiming for a car and you started using it for your business before April 2015
  • You have to be a sole trader or business partnership – limited companies and limited liability partnerships can’t claim simplified expenses.

Who can’t use the Mileage Allowance Method:

  • If you’ve previously used ‘Actual Expenses’ Method in previous tax returns for the SAME VEHICLE
  • If you rent out the vehicle to another driver
  • If you don’t own the vehicle
  • If you share the vehicle with another driver/partner
  • If you are claiming for a vehicle you started using for business before April 2015
  • If you are in a limited liability partnership or are a limited company
Vehicle Flat rate per mile with simplified expenses
Cars and goods vehicles first 10,000 miles 45p
Cars and goods vehicles after 10,000 miles 25p


You don’t have to use flat rates for all your vehicles. However, once you use flat rates for a vehicle, you must continue to do so as long as you use that vehicle for your business.

Using The Drivers Tax App, you only need to enter your mileage the App calculates the correct flat rates.

To find Mileage Allowance in the App: –

Go to “Add Expenses” then “Description” from that dropdown menu scroll and select “Mileage Allowance”

Hope this helps,
The Drivers Tax App Team