Understanding mileage claims for accounting contractors
As an accounting contractor, understanding what mileage you can claim is crucial for optimizing your tax position. Many contractors miss out on legitimate expense claims simply because they're unsure about HMRC's rules or find the record-keeping too burdensome. The good news is that HMRC provides clear guidelines on business mileage claims, and with the right approach, you can significantly reduce your tax bill while remaining fully compliant.
When we examine what mileage accounting contractors can claim, we're essentially looking at travel expenses incurred wholly and exclusively for business purposes. This includes journeys to client sites, meetings with potential clients, trips to your accountant or business advisor, and travel to temporary workplaces. The key distinction lies between commuting to a permanent workplace (which isn't claimable) and business travel between temporary work locations (which is claimable).
Using dedicated tax planning software can transform how you manage mileage claims. Instead of manually logging journeys in spreadsheets or notebooks, modern platforms allow you to track mileage automatically, apply HMRC-approved rates instantly, and generate compliant expense reports with minimal effort. This not only saves time but ensures you're claiming everything you're entitled to while avoiding compliance risks.
HMRC approved mileage rates for 2024/25
HMRC sets specific Approved Mileage Allowance Payments (AMAP) that determine how much mileage accounting contractors can claim tax-free. For the 2024/25 tax year, the rates remain unchanged from previous years:
- 45p per mile for the first 10,000 business miles in a tax year
- 25p per mile for each additional business mile over 10,000
- 24p per mile for passenger carrying (each passenger making the same business journey)
- 5p per mile for bicycle travel on business journeys
These rates are designed to cover all costs associated with using your vehicle for business purposes, including fuel, insurance, maintenance, depreciation, and other running costs. You cannot claim additional expenses for these items separately if you're using the AMAP rates.
Let's consider a practical example: if you drive 8,000 business miles in a tax year, you could claim £3,600 (8,000 × 45p) as a tax-deductible expense. For contractors using their personal vehicles extensively for business travel, understanding what mileage accounting contractors can claim becomes a significant tax planning opportunity.
What qualifies as business mileage?
Determining what mileage accounting contractors can claim depends entirely on the nature of each journey. HMRC distinguishes between different types of travel:
- Travel to temporary workplaces: If you work at a client site for less than 24 months, this qualifies as business travel
- Travel between workplaces: Moving between different client sites or business locations during the same day
- Business meetings: Travel to meet clients, suppliers, or professional advisors
- Training courses: Attending relevant professional development or training
What doesn't qualify? Regular commuting from home to a permanent workplace where you expect to work for more than 24 months is not claimable. Similarly, personal journeys mixed with business purposes need careful apportionment. For instance, if you drive to a client meeting but stop for personal shopping on the way home, only the business portion qualifies.
Many accounting contractors struggle with the "temporary workplace" definition. As a rule of thumb, if you expect an assignment to last less than 24 months or it actually does last less than 24 months, travel to that location qualifies as business mileage. This is particularly relevant for contractors who typically work on fixed-term projects.
Record-keeping requirements for mileage claims
To substantiate what mileage accounting contractors can claim, HMRC requires detailed records that could be requested during an enquiry. Your records should include:
- Date of each business journey
- Start and end mileage for each trip
- Destination and business purpose
- Total business miles for each journey
- Running total of business miles for the tax year
Manual record-keeping can be time-consuming and prone to errors. This is where technology becomes invaluable. Modern tax planning platforms often include mileage tracking features that automatically log journeys, categorize them by purpose, and calculate your entitlement using current HMRC rates. Some even integrate with mapping applications to provide accurate distance measurements.
Maintaining robust records isn't just about compliance—it's about maximizing your legitimate claims. Without proper documentation, you might underclaim simply because you've forgotten journeys or estimated conservatively. Good record-keeping ensures you claim every eligible mile while having evidence to support your position if HMRC questions your returns.
Using simplified expenses for vehicle costs
For accounting contractors who use their vehicle extensively for both business and personal purposes, there's an alternative to tracking actual costs: simplified expenses. This flat-rate method can be simpler than calculating actual vehicle running costs and claiming business proportion, though it's not always the most beneficial approach.
The simplified expenses system uses the same mileage rates mentioned earlier (45p/25p per mile) but provides an alternative to the traditional method of claiming a proportion of actual vehicle costs. You'll need to compare both methods to determine which gives you the higher deduction.
Using our tax calculator can help you model both approaches to see which works best for your circumstances. The simplified method typically benefits those with newer, more efficient vehicles, while the actual costs method might be better for older vehicles with higher maintenance costs.
Common pitfalls and how to avoid them
Many accounting contractors make simple mistakes when determining what mileage they can claim. The most common errors include:
- Claiming regular commuting to what HMRC considers a permanent workplace
- Failing to keep contemporaneous records (creating records long after the journeys)
- Mixing personal and business travel without proper apportionment
- Forgetting to reset the mileage counter at the start of each tax year
- Not understanding the 24-month rule for temporary workplaces
These mistakes can lead to either underclaiming (missing out on legitimate tax relief) or overclaiming (creating compliance risks). The solution lies in establishing clear processes from the beginning of each tax year. Designate a specific method for tracking mileage, whether through a dedicated app, spreadsheet, or mileage logbook, and maintain consistency throughout the year.
For contractors seeking specialist support, exploring professional tax planning services tailored to your needs can provide peace of mind. Many accounting contractors find that the time saved and potential tax savings more than justify the investment in proper systems and advice.
Maximizing your mileage claims
Understanding what mileage accounting contractors can claim is just the first step—implementing an efficient system is what delivers real value. Start by analyzing your typical business travel patterns. Do you have multiple client sites? Do you attend regular meetings away from your main work location? Identifying these patterns helps you recognize all claimable journeys.
Next, establish a reliable tracking system. Whether you choose a dedicated mileage tracking app, integrate tracking into your existing accounting software, or use a simple notebook, consistency is key. The goal is to capture every business mile without it becoming an administrative burden.
Finally, regularly review your claims. Don't wait until the tax year end to calculate your entitlement. Quarterly reviews help identify any patterns you might have missed and ensure your records remain accurate. This proactive approach to understanding what mileage accounting contractors can claim transforms tax planning from an annual chore into an ongoing optimization process.
By mastering mileage claims, accounting contractors can significantly reduce their tax liability while ensuring full HMRC compliance. The rules are clear, the rates are generous, and with modern tools, the administration doesn't need to be overwhelming. Focus on accurate record-keeping, understand what qualifies, and leverage technology to simplify the process—your bottom line will thank you.
