Income Tax (Trading and Other Income) Act 2005 section 94F

The appropriate mileage amount

Section 94F sets out how to calculate the fixed mileage allowance that a sole trader or partner may claim as a deductible business expense when using their own car, goods vehicle or motorcycle for business journeys.

• The allowable deduction is calculated by multiplying the number of business miles driven (not as a passenger) by a fixed rate per mile that depends on the type of vehicle used.
• Cars and goods vehicles attract a rate of 45p per mile for the first 10,000 business miles in the period, falling to 25p per mile for any additional miles; motorcycles attract a flat rate of 24p per mile with no threshold.
• The 10,000-mile threshold applies across all cars and goods vehicles used for the trade in the period, so the 45p rate cannot be claimed on more than 10,000 miles in total even if several vehicles are used.
• The Treasury has the power to amend the mileage rates and rate bands by regulations, and any such change may also adjust the 10,000-mile threshold accordingly.