Business Mileage Or Car Expenses – What’s Claimable in 2025?

Running a business in the UK? If so then you must know which expenses you can claim for tax to save your money. One area that often confuses people is business mileage and car expense. As HMRC rules change and work patterns shift in 2025, understanding the business mileage and car expenses details has become more important for business owner than ever.

In this blog, we’ll break down what expenses you can and can’t claim. If any expenses is claimable then how to claim it?

Who Can Claim Car and Mileage Expenses?

If you’re a sole trader, a company director, or a business partner, you might be able to claim expenses for using a vehicle for work. But the rules depend on a few things. It depends on how your business is set up and who owns the vehicle (you or the business). It also depends on whether you’re using the simple mileage method or claiming actual vehicle costs.

The Simple Mileage Claim Method

If you’re a sole trader or in a partnership and using your own car for work then you can use HMRC’s simple mileage claim method to claim the mileage. In 2025, the rates are 45p per mile for the first 10,000 miles, and 25p per mile after that. For motorcycles, it’s 24p per mile, and for bicycles, 20p per mile. These rates already include fuel cost, insurance and servicing.

You can claim for trips like visiting clients, going to different work locations, buying business supplies, or working at temporary sites. But you can’t claim for driving between home and your regular workplace or for personal trips.

Claiming Actual Vehicle Expenses

The Actual Cost Method allows you to claim tax relief based on the real expenses that you’ve spent for running of your vehicle for business. This includes costs such as fuel, insurance, MOT and servicing, repairs, vehicle tax, interest on vehicle finance (proportionate to business use), lease or hire payments, and depreciation through capital allowances. To use this method, you must accurately track your mileage and apportion all costs between personal and business use. It’s particularly beneficial if you drive high mileage, use a more expensive vehicle, or operate a company-owned car—especially relevant for limited company directors using a company vehicle.

Limited Companies: Mileage vs Reimbursement

If you’re a director or employee of a limited company, you can’t claim business mileage directly through your Self Assessment. Instead, you have two main options.

Option A is to use your personal vehicle for business travel and have the company reimburse you using HMRC-approved mileage rates. This approach allows the company to claim the reimbursement as a business expense, and as long as the rates are within HMRC limits, there’s no personal tax liability.

Option B is to use a company car — owned or leased by the business — with all related expenses covered by the company. However, this could result in a Benefit-in-Kind (BiK) tax charge for you, based on the car’s CO₂ emissions, list price, and fuel type. That said, electric vehicles remain a tax-efficient choice in 2025, with BiK rates still under 5% in many cases, making them an attractive option for directors and employees.

For business travel, HMRC sets the mileage rate at 45p per mile up to 10,000 miles, then 25p per mile after that.

Electric Vehicles (EVs): Tax Advantages in 2025

As part of the UK government’s ongoing commitment to cleaner and greener transport, electric vehicles (EVs) continue to offer significant tax advantages for both individuals and businesses. In 2025, many EVs will still attract a much lower Benefit-in-Kind (BiK) tax rate — as low as 2% for company cars — making them a highly cost-effective choice. EVs are also exempt from road tax until April 2025, after which only minimal charges will apply. Businesses operating in Clean Air Zones (CAZs) benefit from exemptions or reduced fees, helping reduce ongoing operational costs. Additional government support includes grants and incentives for installing EV charging stations. Plus, companies can claim a 100% First Year Allowance (FYA) on qualifying electric vehicles and charging equipment, enabling full tax relief in the year of purchase. These combined benefits make EV adoption a smart and sustainable financial move for UK businesses.