Mileage vs actual costs for gig workers (2025-26)

Summary

For 2025-26, most car-using gig workers (Uber, Amazon Flex, private hire) either break even or win slightly by using HMRC's simplified mileage rates, while high-cost, lower-mileage drivers sometimes do better on actual costs.

You must choose one method per vehicle. Once you start using simplified mileage for a specific car or van, you are effectively locked into it for that vehicle's life, and you cannot claim fuel/insurance/etc. as well.

The "business miles" you can claim are all miles wholly and exclusively for work (jobs, driving between jobs, and usually driving to/from the area you work) but not normal private trips or big personal detours, so a good mileage log is non-negotiable.

Key facts (UK 2025-26)

• 2025-26 tax year is 6 April 2025 to 5 April 2026.
• HMRC simplified expenses mileage rates for self-employed in 2025-26 (cars, vans, motorcycles):
  • Cars and goods vehicles: 45p per mile for the first 10,000 business miles.
  • Cars and goods vehicles: 25p per mile for business miles over 10,000.
  • Motorcycles: 24p per mile for all business miles.
• Bicycles (for reference, mainly for employees but often used as a benchmark): 20p per mile.
• If you use simplified mileage for a vehicle, you cannot also claim actual running costs (fuel, servicing, insurance, etc.) or capital allowances for that same vehicle.
• Once you use the flat-rate mileage for a vehicle, you must continue to do so "as long as you use that vehicle for your business".
• Under HMRC travel rules, business mileage usually includes:
  • from where you start work that day to pick-up or first job;
  • between jobs, restaurants and customers;
  • from last job back to where you finish work (this can be home if that's where you normally start/finish, but there are grey areas).
• It excludes normal private use: school runs, shopping, social trips, and long detours that are not work-related.

Legislation, case law, regulation

• Income Tax (Trading and Other Income) Act 2005: sets how trading profits are calculated, including deducting business motor expenses.
• Income Tax Act 2007: includes the "wholly and exclusively" test for business expenses.
• HMRC Simplified expenses if you're self-employed: official scheme for flat-rate mileage and other simplified expenses; confirms the rates and lock-in rule.
• HMRC HS222, How to calculate your taxable profits (2025): explains allowable/disallowable expenses, private-use adjustments, and simplified expenses.
• HMRC Car, van and travel expenses guidance: sets out what counts as business travel and what does not.

How it actually works

1. What counts as a "business mile" for gig workers?

HMRC's rule: the mile must be wholly and exclusively for your trade.

For a driver or rider:

Clearly business miles:

• driving from where you start work to the first job (for example from home to your Uber "zone" if you go there specifically to start working);
• from pick-up to drop-off for every job;
• between jobs (for example from one restaurant to another, or one passenger to the next);
• driving to the MOT, servicing or repairs when that is for your gig vehicle;
• driving to a union meeting or accountant specifically about your gig work.

Usually business miles (but record carefully):

• leaving home and heading into town solely to go "online" and start accepting jobs;
• driving home straight after your last job when home is effectively your base.

Not business miles:

• going shopping or to the gym on your way home;
• school runs and personal errands, even if you also have the app on;
• big detours for personal reasons.

In practice, most accountants for gig workers treat the majority of app-time movement (online and available, heading to jobs, between jobs, heading home after jobs) as business mileage, but you must be able to back it up with a log if HMRC asks.

2. How to keep a mileage log

HMRC says you must keep records of your business miles.

Minimum to track:

• Date.
• Start and end odometer readings or start and end locations with miles.
• Purpose (for example "Uber jobs, evening shift", "Deliveroo deliveries city centre").
• Miles driven for business that day.

You can use:

• a notebook and odometer;
• an app (DriverNote, MileIQ, Everlance, or even Google Timeline plus manual checking);
• your platform trip history as a cross-check, but don't rely on the app alone.

3. Simplified mileage vs actual costs, method rules

Simplified mileage (cars/vans/motorcycles)

• You track business miles.
• At the end of the tax year, you apply HMRC's fixed rates:
  • Cars/vans: 45p for first 10,000 miles, 25p after that.
  • Motorcycles: 24p per mile.
• This rate is designed to cover running costs including fuel, insurance, servicing, MOT, tyres and depreciation/capital allowances.
• You can still claim parking, tolls and congestion charge separately for business journeys, plus other non-vehicle costs (phone, kit etc.).
• Once you start using simplified expenses for a vehicle, you must keep using it for that vehicle as long as you use it in the business; you cannot flip that vehicle to actual costs later.
• You cannot use simplified mileage if you have already claimed capital allowances or the vehicle is a classic "commercial-use" taxi type (for example some black cabs); HMRC treats them differently.

Actual costs method

You keep receipts and bank records for all vehicle costs:

• fuel/electricity;
• insurance (including hire-and-reward / courier cover);
• MOT, servicing, repairs, tyres, breakdown;
• road tax;
• cleaning/valeting;
• interest on vehicle finance;
• lease or hire charges (subject to the usual car rules).

You work out what percentage of total vehicle use is business (business miles ÷ total miles) and apply that percentage to the total annual costs. You may also get capital allowances for the business share of the vehicle (though cars have restrictions, and under cash basis some of this is folded into rules). You cannot also claim mileage for that vehicle.

4. Bikes, e-bikes and mopeds

• For motorcycles, the simplified rate is 24p per mile (no 10,000-mile step).
• For bicycles, there is a 20p per mile rate used for employees (and HMRC's mileage tables reference cycles at 20p); many accountants for small self-employed bike couriers instead treat bike and kit costs as actual expenses rather than using a formal mileage scheme.
• E-bikes can be treated like bicycles for cost/kit or as a vehicle with actual running costs. HMRC does not have a special self-employed e-bike mileage rate in 2025-26, so most advisers tell riders to claim actual costs (battery, repairs, tyres, etc.) plus their kit.

5. What gig-specialist accountants actually recommend

From 2024-2025 guides aimed at taxi drivers and couriers:

Many say simplified mileage is usually best for:

• Uber/private-hire drivers in "normal" used cars, doing 15,000 to 35,000 business miles a year, with reasonably standard running costs.

They say actual costs can be better if:

• you have a very expensive or heavily financed vehicle, with high interest and running costs;
• your business mileage is modest (for example 8,000 to 10,000 miles) but your fixed vehicle costs are high.

They also point out that simplicity matters: mileage avoids arguments about exact private-use percentages and missing receipts.

Worked example

We'll assume all three examples use a standard petrol car in 2025-26. Figures are approximate, just to show the pattern.

Example 1: 8,000 miles/year (part-time Deliveroo / Uber Eats driver)

8,000 business miles in 2025-26.

Real-world costs for the year:

• Fuel: £2,000
• Insurance: £900
• Servicing/repairs/tyres: £700
• Road tax: £200
• Breakdown: £100
• Cleaning: £100
• Finance interest: £300
• Total vehicle running cost = £4,300.

Assume total miles (business + personal) = 10,000, so business proportion 80%.

Actual costs: 80% of £4,300 = £3,440 allowable vehicle cost.

Simplified mileage: 8,000 miles x 45p = £3,600.

Here, simplified mileage gives £160 more deduction and is easier.

Example 2: 15,000 miles/year (part-time / heavy Uber driver)

15,000 business miles.

Real-world costs (a bit higher):

• Fuel: £3,000
• Insurance: £1,200
• Servicing/repairs/tyres: £1,200
• Road tax: £200
• Breakdown: £150
• Cleaning: £150
• Finance interest: £400
• Total = £6,300.

Total miles for the year (business + personal) = 18,000, so business proportion about 83%.

Actual costs: 83% of £6,300 = about £5,229.

Simplified mileage:

• First 10,000 miles at 45p = £4,500.
• Remaining 5,000 miles at 25p = £1,250.
• Total = £5,750.

Here, simplified mileage gives about £521 more deduction.

Example 3: 30,000 miles/year (full-time multi-platform driver)

30,000 business miles.

Real-world costs (very high):

• Fuel: £6,000
• Insurance: £1,800
• Servicing/repairs/tyres: £2,500
• Road tax: £250
• Breakdown: £180
• Cleaning: £350
• Finance interest: £700
• Total running costs = £11,780.

Assume total miles = 34,000, so business proportion about 88%.

Actual costs: 88% of £11,780 = about £10,366.

Simplified mileage:

• First 10,000 miles at 45p = £4,500.
• Remaining 20,000 miles at 25p = £5,000.
• Total = £9,500.

Now actual costs win by about £866.

So:

• Low to mid mileage (8,000 to 15,000): simplified mileage usually wins or is very close.
• Very high mileage with very high costs (30,000+): actual costs can be better, but you must really do the sums and keep tight records.

What Reddit, TikTok and forums get wrong

1. "You can claim 45p per mile AND all your fuel and insurance, HMRC doesn't check." Wrong. HMRC's simplified expenses rules say the flat rate replaces those costs for that vehicle; double-claiming is over-claiming.

2. "You can switch between mileage and actual costs every year to get the best deal." Misleading. Once you use simplified mileage for a vehicle, you must keep using it as long as you use that vehicle in the business; switching back and forth is not allowed for that car.

3. "Driving from home to your busy zone isn't business, only the actual trips count." Too strict. HMRC guidance talks about business travel vs ordinary commuting; for self-employed drivers with no fixed workplace, the trip from home to the area where you pick up work is often part of business mileage, especially if you go out solely to work.

4. "Motorbikes get 24p for the first 10,000 miles then nothing, you have to use actual costs above that." Wrong. The simplified rate for motorcycles is 24p per mile for all business miles; there is no 10,000-mile step.

5. "Bike and e-bike couriers can't really claim anything, no mileage for bikes." Too pessimistic. You can claim kit, repairs, and running costs of an e-bike, and while HMRC's 20p rate is mainly for employees, many advisers treat cycle costs as actual expenses with similar effect.

Action steps for the reader

1. Estimate your realistic annual business miles for 2025-26 (8,000? 15,000? 30,000+?).
2. Get last year's real vehicle costs (fuel, insurance, repairs, tax, breakdown, cleaning, finance interest) and work out a business percentage using total miles.
3. Compare:
   • mileage method (45p/25p or 24p for motorbikes) vs
   • actual costs x business percentage.
4. Decide before filing 2025-26 which method you will start using for each vehicle, remembering you are effectively locked into mileage once you pick it for a car or van.
5. Start a proper mileage log now (app or notebook) so you can evidence business miles if HMRC queries your return.
6. If you are a bike or e-bike rider, list all kit and repair costs and make sure you claim them rather than assuming "I don't have a car so I can't claim anything".

Related tools GigKiln should build

• Mileage vs actual-costs calculator: asks for miles and actual annual costs, then shows which method gives a bigger deduction.
• Business-mile classifier: short quiz that explains which of your typical journeys count as business miles.
• Mileage log template: simple printable and app-style format tailored to gig drivers and riders.

Related guides

• "Expenses for gig workers: a complete 2025-26 checklist"
• "Self Assessment for gig workers: putting mileage and vehicle costs on SA103"
• "Record-keeping for gig workers: mileage logs, receipts, and what HMRC will accept"
• "Electric cars, hybrids and e-bikes for gig work: tax angles in 2025-26"

Sources

Primary

• GOV.UK, Simplified expenses if you're self-employed: Vehicles, accessed 18 April 2026.
• GOV.UK, Simplified expenses if you're self-employed: Overview, accessed 18 April 2026.
• GOV.UK, Travel, mileage and fuel rates and allowances, accessed 18 April 2026.
• GOV.UK, HS222 How to calculate your taxable profits (2025), accessed 18 April 2026.
• GOV.UK, Expenses if you're self-employed: Car, van and travel, accessed 18 April 2026.

Secondary

• GoSimpleTax, Allowable expenses for self-employed couriers and delivery drivers, accessed 18 April 2026.
• Cotton's Group, Self-employed car expenses: a guide for small businesses and sole traders, accessed 18 April 2026.
• Taxeezy, Mileage Allowance For Self-Employed, accessed 18 April 2026.
• THP, Simplified expenses for self-employed people, a quick guide, accessed 18 April 2026.
• Enterprise Made Simple, Self-employed car expenses, accessed 18 April 2026.
• AccountingPeople, HMRC Mileage Allowance Rates 2025/26, accessed 18 April 2026.
• Klippa / ANNA / other mileage explainers for 2026, accessed 18 April 2026.