Car Expenses for the Self-Employed: Actual Costs vs Simplified Expenses
Chrissy Leach • 19 January 2026
Understanding How to Claim Vehicle Costs on Your Tax Return
If you’re self-employed and use a car for business purposes, knowing how to claim your vehicle costs correctly can save you both time and money. HMRC offers two methods for claiming car expenses: actual costs and simplified expenses. Choosing the right method depends on your circumstances and record-keeping preferences.
What is Business Mileage?
Business mileage refers to your journeys for work-related activities that are not your normal commute. This includes:
- Visiting clients or suppliers
- Traveling between work sites
- Collecting or delivering goods
- Attending business meetings or events
Commuting from home to your usual workplace does not count as business mileage.
Keeping an accurate mileage log is essential for claiming either actual costs or simplified expenses.
Actual Costs: Claim What You Really Spend
Claiming actual costs means calculating your business-related vehicle expenses based on your receipts and records. Eligible costs include:
- Fuel
- Insurance
- Road tax
- MOTs
- Repairs and servicing
- Vehicle cost (subject to capital allowance rules)
How it works: You need to calculate the percentage of business use. For example, if your car is used 60% for business, you can claim 60% of your total car expenses. You should keep a mileage log to calculate the business %.
Pros:
- Potentially higher deductions if your car is expensive to run
- Can claim precise costs for tax efficiency
Cons:
- Requires detailed record-keeping of all expenses
- More time-consuming
Simplified Expenses: Flat Rates Made Easy
HMRC’s simplified expenses allow you to claim a flat rate per mile, without tracking actual vehicle costs. The rates for 2025/26 are:
- 45p per mile for the first 10,000 business miles
- 25p per mile for additional business miles
How it works: If you drive 8,000 business miles in the year, you simply multiply 8,000 by 45p, giving a claim of £3,600.
Pros:
- Easy to calculate and track
- No receipts or detailed records required (just a mileage log)
Cons:
- May be less beneficial if your actual vehicle expenses are high
Which Method Should You Choose?
- Use actual costs if your vehicle is expensive to run and business use is significant.
- Use simplified expenses if you want a straightforward, low-maintenance approach.
Many self-employed people track both methods during the year to compare and choose whichever gives a bigger tax deduction. Note that once you've made a choice, you need to carry on with that choice for the whole time you use that vehicle.
Need help simplifying your taxes?
If you’re self-employed and not sure what you can claim, we can make it clear.
Get in touch with CJL Accountancy
today, we’ll help you make sense of your numbers so you can focus on your business.
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