If you’re a sole trader who uses a car, van, or motorcycle for your business, you should absolutely be claiming the related allowable expenses. It’s a no brainer!
Vehicle costs are the most common expense type raised through the Hnry app, and we love to see it – claiming allowable expenses is a great way to get tax relief. That in mind, vehicle expenses can get tricky because there are two different ways you can go about claiming them.
Firstly, there’s the simplified expenses method, where you claim a flat rate for mileage. Then there’s the actual costs method, where you claim the actual running costs (it’s in the name!) for your vehicle.
Once you pick a method for your vehicle, you’re locked in – you can’t switch between the two while the vehicle is used for your business. Each method has slightly different requirements, and the method you decide to use will depend on your usage and needs. You can also only claim expenses for your business usage of your vehicle – unfortunately, those quick trips to the shops for groceries won’t cut it with HMRC!
With all that in mind, let’s get you in the driver’s seat, ready to claim with confidence.
What motor vehicle expenses can you claim?
Great question!
The good news is that you can claim most expenses related to the business use of your vehicle (although it’s slightly different depending on your claiming method).
This includes things like:
- Fuel
- Maintenance costs
- Congestion/ULEZ/Clean Air Zone charges
- Parking and toll fees
- Insurance
- MOT costs
💡 It’s important to note that you can’t claim any fines, parking tickets, or towing fees you incur, even if they’re earned while you’re on the job. Sorry!
Importantly, and we can’t stress this enough, you can also only claim tax relief on expenses related to the business use of your vehicle.
Basically, if you’re using your vehicle in connection with business activities, it may qualify as business use, and you may be able to claim expenses for it.
But there are limitations. For example, trips between your home and your regular place of work are classed by HMRC as personal travel, ruling out any deductions.
💡 If you typically work from a home office, trips to visit clients or complete work on location are generally claimable – so long as that location doesn’t count as a regular place of work.
“Business use”
What counts as business use when it comes to claiming motor vehicle expenses? Great question.
You may be eligible to claim allowable expenses for using your vehicle when you:
- Travel from your usual workspace to another temporary work location (for instance, a client’s office)
- HMRC has very specific guidelines around what counts as a temporary work location! For more information, visit the gov.uk website
- Deliver goods, visit suppliers, or fetch materials
- Attend work-related conferences or gatherings outside your usual working location
- Travel between distinct job locations
These trips generally count as “business use” of your vehicle, in the eyes of HMRC. Trips outside these guidelines may be considered “personal use”.
How to claim car and other vehicle expenses
To claim vehicle expenses, you’ll need to use either simplified expenses (eg. claiming a flat rate for mileage), or the actual costs method.
Generally, you can use either method for your vehicle, unless it was designed specifically for commercial use – like a black cab, a hackney carriage, or a dual-control car for driving lessons. In this case, you’d need to use the actual costs method.
Once you’ve chosen a method, you’ll need to use that same method throughout the period it’s used in your business – so choose wisely! The good news is that if you have more than one vehicle, you don’t have to use the same method for all of them – you can decide which method best fits each separate vehicle.
Let’s look at how these claiming methods work in practice:
Simplified expenses (claiming a flat rate for mileage)
Like the name suggests, claiming vehicle costs using simplified expenses is, well, simple!
Basically, you claim a set amount for every mile you travel for business purposes. This means you’ll need to track your mileage accordingly, to support your claim.
Using simplified expenses means you’re claiming for all running costs and depreciation in one go, rather than individual expenses incurred. With that in mind, you cannot claim capital allowances for your vehicle if using simplified expenses.
If you do want to claim capital allowances for your vehicle, you’ll then need to use actual costs to claim all other vehicle expenses.
💡 Tolls, congestion charges, and parking fees aren’t covered in the mileage flat rate. These can be claimed separately as an expense, if incurred during business-related travel.
Tracking business miles
HMRC requires you to be able to prove your claim with records of business miles travelled, and for what purpose. To that end, you’ll need to keep a record of all work-related trips, including details like:
- Date of the trip
- Start and end locations
- Purpose of the trip
- Business miles travelled
Once logged, you’ll need to hold on to these records for five years after the relevant January 31 filing deadline. The good news is that there are plenty of digital mileage trackers available that you can use to create and save records. Whoo!
HMRC mileage rates for the 2025/26 tax year
Use these rates to claim simplified expenses for your work vehicle:
| Vehicle type | Rate |
|---|---|
| Cars and vans (goods vehicles), first 10,000 miles | £0.45 |
| Cars and vans (goods vehicles), after 10,000 miles | £0.25 |
| Motorcycles | £0.24 |
Actual costs method
With actual costs, you’ll need to claim the business-percentage of individual vehicle expenses, including keeping receipts to prove your claim. This includes things like:
- Fuel
- Insurance
- Lease payments
- Repairs and maintenance
- Parking
- Interest on a loan used to purchase the vehicle
You should also be able to prove the proportion of miles that were related to business use, as opposed to personal. To this end, you may need to keep a record of all trips, for at least a “representative period”, in order to demonstrate your calculated business percentage. This record should include:
- Date of the trip
- Start and end locations
- Purpose of the trip
- Business miles travelled
💡 The percentage you claim should reflect business usage across the full tax year. It’s not really about claiming 70% of fuel one week, and 30% the next – instead, you’ll need to calculate a reasonable business-use percentage and use that across all relevant expense claims.
How to claim capital allowances for your car
💡 Note: You can’t claim capital allowances if you’re using simplified expenses – depreciation is already included in the mileage rate. That would be double-dipping!
Claiming capital allowances for your car primarily depends on how much CO2 it emits, and whether the car is new or used. Based on this, it’ll either fall into the 100% first-year allowance, the main rate pool, or the special rate pool.
If your car is for both business and private use, you can only claim capital allowances for the business usage (again, can’t stress this enough!). In this case, you’ll need to use a single asset pool.
💡 Other vehicles like vans, lorries, trucks, and motorcycles aren’t treated as “cars” for capital allowances. Instead, they usually qualify for the Annual Investment Allowance (AIA), which lets you deduct the full cost in the year you buy them.
Ok, that was quite a bit of information. Here’s how it all works:
100% first-year allowance
If your car is:
- new and unused, and
- has zero CO2 emissions,
it may be eligible for the 100% first-year allowance. In this case, you’d essentially claim the full value of the car in the first year it’s used.
💡 If your car is for both business and personal use, you can only claim the business portion.
Main rate pool (18%)
If your car is:
- A second-hand electric car, or
- Its CO2 emissions are below a certain threshold (depending on year of purchase)
it falls into the main rate pool. You’re eligible to claim 18% of the written down value of this pool each tax year.
💡 “Written down value” is the value of the pool after the allowance rate (eg. 18% for the main rate pool) is claimed each tax year.
Special rate pool (6%)
If your car’s CO2 emissions are above a certain threshold (depending on year of purchase), it’ll belong to the special rate pool. You can claim 6% of the written down value of this pool each tax year.
Single asset pool
If your car is for both business and personal use, you’ll need to use a single asset pool to claim capital allowances. You’d then claim the business percentage of the allowance rate it was otherwise eligible for.
Cars bought after April 2021
The most recent emissions threshold applies to all cars purchased after April 2021:
| Car description | Eligible for |
|---|---|
| New and unused cars with zero CO2 emissions | 100% first-year allowance |
| Second-hand electric cars | Main rate pool |
| New or second hand cars with CO2 emissions of 50g/km or less | Main rate pool |
| New or second hand cars with CO2 emissions of over 50g/km | Special rate pool |
Let Hnry take the driver’s seat (for your expense claims)
Phew! That’s a lot of information. The good news is, you actually don’t have to know all this – when it comes to sole trader taxes, Hnry makes it all seriously easy.
Hnry is an award winning app and tax service, designed specifically for sole traders. For just 1% +VAT of your self-employed income, capped at £600 a year, Hnry will calculate and pay all your tax bits and bobs for you, including:
- Income tax
- VAT
- National Insurance contributions
- Student loan repayments
- Private Pension contributions (optional)
Let Hnry take the driver’s seat on your tax admin, so you can focus on what you do best – the actual work. Join Hnry today!