Van mileage allowance or actual costs: which should I claim?

If you’re self-employed and drive a van for work, there are two ways to claim for it. You can claim a flat rate for every business mile, or you can claim what the van really costs you to run. You pick one for each van, and once you’ve picked, you stick with it.

Option 1: the flat rate per mile

HMRC calls this simplified expenses. For 2026 to 2027, vans and cars get 55p a mile for the first 10,000 business miles in the tax year and 25p a mile after that. The rate covers fuel, insurance, servicing, repairs, tax and wear, so you can’t claim any of those on top. Parking and tolls on business trips can still be added.

All you need is a log of your business miles.

Option 2: actual costs

Add up what you spend on the van in the year: fuel, insurance, servicing and repairs, road tax, and breakdown cover. Then claim the business share. If 9,000 of your 12,000 miles were for work, the business share is 75%.

With actual costs you can also claim the business share of buying the van, through capital allowances or as an expense if you use cash basis. You can’t do that with the flat rate.

A worked example

A van covers 12,000 miles in the year, 9,000 of them for work. Running costs are £4,600: £2,600 fuel, £900 insurance, £700 servicing and repairs, and £400 road tax and breakdown cover. These are made-up figures, so put in your own.

For an older van that’s paid for, the flat rate usually wins, and it’s far less bookkeeping. Actual costs tend to win when you’ve just bought a van, or when it’s expensive to run. In the later years you only claim running costs, and if you sell the van, some of what you get for it usually counts back as business income.

The rule that locks you in

• Once you use the flat rate for a van, you have to keep using it for as long as that van is in your business. You can only change method when you change van.
• If you’ve ever claimed capital allowances on a van, or put its cost through as an expense, you can’t switch it to the flat rate.

So the choice is really made the year you start using a van for work. If you’re buying one, ask your accountant before you claim.

How Kev helps

Whichever you choose, you need your business miles. Kev’s mileage tracker logs every work trip and works out the flat rate claim at 55p and 25p for you. If you claim actual costs, log fuel, insurance and repairs as expenses under HMRC’s car, van and travel category, and use your mileage report for the business share. See also what HMRC needs in a mileage log.

Sources

• gov.uk: Simplified expenses, vehicles
• gov.uk: Car, van and travel expenses
• HMRC Business Income Manual: simplified expenses for motor vehicles