The 45p/25p mileage rate for gig workers

What it is

HMRC's simplified expenses scheme lets self-employed drivers claim a flat rate per business mile instead of tracking fuel, insurance, servicing and depreciation separately. For 2025-26 the rates are 45p per mile for the first 10,000 business miles in a car or van, 25p per mile for business miles above 10,000, and 24p per mile for motorcycles with no 10,000-mile step. Bicycles have a 20p rate mainly used for employees. Once you use simplified mileage for a specific vehicle, you are locked into it for as long as that vehicle is in your business. You cannot switch to actual costs later for the same car.

How it applies to gig workers

You pick one method per vehicle. The 45p/25p rate covers fuel, insurance, servicing, MOT, tyres, breakdown cover and depreciation for that car. You can still claim parking, tolls, congestion charges, phone, kit and platform fees separately. Under actual costs you keep every receipt (fuel, insurance including hire-and-reward, servicing, repairs, road tax, finance interest, lease) and apply the business-use percentage based on business miles divided by total miles.

Worked comparison one. A part-time Uber Eats driver does 8,000 business miles in 2025-26. Total miles 10,000, so business proportion 80%. Real vehicle costs £4,300 a year. Actual method: 80% of £4,300 = £3,440. Mileage method: 8,000 x 45p = £3,600. Mileage wins by £160 and is simpler.

Worked comparison two. An Uber driver does 15,000 business miles with £6,300 running costs and 83% business use. Actual method: £5,229. Mileage method: 10,000 x 45p plus 5,000 x 25p = £4,500 + £1,250 = £5,750. Mileage wins by £521.

Worked comparison three. A full-time multi-platform driver does 30,000 business miles with £11,780 running costs and 88% business use. Actual method: £10,366. Mileage method: 10,000 x 45p plus 20,000 x 25p = £4,500 + £5,000 = £9,500. Actual wins by £866.

Simplified mileage usually wins for 8,000 to 20,000 business miles on standard petrol or diesel cars. Actual costs often win at 25,000+ miles with high-cost vehicles, heavy repairs or big finance interest. You need a proper mileage log either way. Date, start and end location or odometer, purpose, miles. App trip history alone is not enough if HMRC asks questions.

What you should do about it

• Estimate your business miles for 2025-26. Split realistic buckets: under 10,000, 10,000-20,000, 20,000+.
• Pull your real vehicle costs for the last 12 months: fuel, insurance, servicing, repairs, road tax, finance interest, cleaning.
• Compare the mileage result against actual costs times business percentage before you decide.
• Remember you are locked into mileage for that specific vehicle once you choose it. Pick carefully.
• Start a mileage log today (notebook or app) so you have evidence if HMRC checks.
• On a motorbike, 24p applies to every business mile. No 10,000-mile step.

Last reviewed

19 April 2026

Internal links this page emits (3-5):

• mileage vs actual costs — anchor: "mileage vs actual costs calculator"
• trading allowance — anchor: "trading allowance"
• class 4 ni — anchor: "Class 4 NI"
• self assessment deadlines 2026 — anchor: "Self Assessment deadlines"
• expenses gig workers — anchor: "full gig worker expenses guide"

Primary source used:

• Research/S2-tax/2.4-mileage-vs-actual-costs.md