Simplified Mileage Rates For Creatives– Are You Missing Out on Tax Relief?

If you’re self-employed, you’ll know that keeping on top of expenses is one of those jobs that never really goes away. One area that often gets overlooked is travel. Instead of keeping every single fuel receipt and trying to work out what proportion of your MOT or insurance is “for business,” HMRC lets you use simplified mileage rates.

The rules are pretty straightforward. You can claim 45p per mile for the first 10,000 business miles in a tax year, and 25p per mile for anything after that. It’s only for journeys that are genuinely work-related — so driving to a client, supplier, or a job counts, but your normal commute doesn’t.

Here’s what that looks like in practice:

• 10,000 miles = £4,500 claim

• 12,000 miles = £5,000 claim (because the extra 2,000 are at 25p, not 45p)

That’s a pretty decent deduction without having to faff around with a shoebox of receipts.

What HMRC Found ?

HMRC ran a survey of 1,000 self-employed people and partners in business partnerships to see how many were using the simplified rates — and why others weren’t.

The results showed that awareness is still pretty low:

• Only 43% knew about the scheme at all

• Car drivers (49%) were more likely to know than van drivers (27%)

• Sole traders (44%) were ahead of those in partnerships (31%)

Most people who had heard about mileage rates only knew because their accountant or tax agent told them. Fewer than 1 in 10 had come across it anywhere else.

Who’s Actually Using It?

The survey also showed that smaller businesses are much more likely to go for mileage rates than bigger ones. For example:

Why? Probably because bigger businesses have accountants who already manage detailed expense claims, and because the actual costs method sometimes works out better if you’ve got higher running costs.

For those who knew about mileage but didn’t use it, the main reasons were:

• Preferring to keep exact records (23%)

• Thinking they’d lose out financially (20%)

• Believing the rates are just too low to reflect the real cost of running a vehicle (14%)

Interestingly, almost half of vehicle users (45%) said the rates were good enough to cover their expenses, though more than a fifth said they weren’t.

Examples in Action

To bring it to life, here are a few real-world style examples:

• Emma, freelance photographer

  - She drives all over London and the South East for shoots, covering around 8,000 business miles a year. By using simplified rates, she can claim £3,600. If she tried to do it the other way, she’d have to work out what percentage of her petrol, servicing, insurance, and tax was for business — mileage is way easier.

• Dan, plumber with a van

  - Dan racks up about 15,000 work miles in a year. His claim works out as:

  • 10,000 × 45p = £4,500

  • 5,000 × 25p = £1,250

  • Total = £5,750

  For tradespeople doing big mileage, simplified rates are handy. But in cases where fuel and running costs are really high, keeping exact records could sometimes mean a bigger deduction.

  
  

• Sarah, graphic designer

  - Sarah doesn’t travel much, maybe 1,000 miles a year visiting clients. That still gives her a £450 claim with very little admin. For someone who doesn’t drive a lot for work, mileage is a no-brainer.

Simplified Rates vs Actual Costs

It’s worth saying that mileage rates aren’t always the best option. Here’s the rough comparison:

• Simplified mileage rates

  • Easy to work out

  • No need to keep a drawer full of receipts

  • HMRC-approved and simple to explain if questioned

• Actual costs method

  • Can work out better if you’ve got a high-cost vehicle or rack up big bills

  • Requires you to keep every bit of evidence (fuel, repairs, servicing, insurance, road tax)

  • You’ll also need to work out how much of that spend is business vs personal use

For most sole traders and small business owners, mileage wins on time saved. But if you’re unsure, it’s worth running the numbers both ways.

How to Make the Most of It

If you decide to use mileage, you still need to keep some basic records. HMRC expects you to log:

• Date of the journey

• Purpose of the trip

• Start and end mileage (or total miles)

The easiest way is with a simple spreadsheet or a mileage app. Apps like MileIQ or QuickBooks Self-Employed can do the tracking automatically, which saves you from trying to remember later.

A couple of other things to remember:

• Once you choose mileage for a vehicle, you have to stick with it — you can’t switch back to actual costs later for that car/van.

• Mileage doesn’t cover everything. If you pay for parking or tolls on a business journey, those can still be claimed separately.

Need a Hand? As specialist Accountants for Creatives we can help.

Getting travel expenses right can make a real difference to your tax bill. As specialist Accountants for Creatives, here at Creative and Numbers, we’ll look at your situation and tell you whether simplified mileage or actual costs will give you the better result.

If you want peace of mind that you’re claiming everything you’re entitled to — for travel or any other business expense — get in touch with Creative and Numbers. We’ll make sure you’re not leaving money on the table