Mileage Allowance HMRC: 2026 Update for Making Tax Digital Clients
The mileage allowance HMRC lets you claim is 55p a mile for the first 10,000 business miles and 25p after that in 2026/27. If Making Tax Digital for Income Tax applies to you, that mileage now has to be logged and reported digitally every quarter, not just once a year.
Published 28 September 2026 · Updated 28 September 2026
The mileage allowance HMRC sets for 2026/27 is 55p per business mile for the first 10,000 miles, then 25p per mile after that, for cars and vans. If Making Tax Digital (MTD) for Income Tax applies to you, that same mileage now has to be captured digitally and reported to HMRC every quarter, not bundled into one annual return.
For Uber, Bolt and private hire drivers, this is more than a filing technicality. Mileage is usually the single largest expense on your tax return, so how you record it under MTD affects four submissions a year, not one. This guide sets out the current rates, exactly what a quarterly-ready mileage log needs to contain, and where MTD changes the rules for drivers already inside it.
Key takeaways
- HMRC's simplified mileage rate for 2026/27 is 55p per mile for the first 10,000 business miles, then 25p per mile after that (cars and vans).
- MTD for Income Tax is mandatory from 6 April 2026 for self-employment and property income over £50,000, falling to £30,000 from 2027 and £20,000 from 2028.
- Inside MTD, mileage records must be kept digitally and flow into a quarterly update through compatible software, not just typed up once a year.
- HMRC will not charge penalty points for late quarterly updates in the first mandated tax year, 2026/27, but tax return and payment deadlines are unaffected.
- Black cabs are generally excluded from simplified mileage and usually need to claim actual vehicle costs instead.
What is the mileage allowance HMRC offers drivers?
The mileage allowance is part of HMRC's simplified expenses scheme. It lets self-employed drivers claim a flat rate per business mile instead of adding up fuel, insurance, servicing, MOTs and depreciation separately, which is usually quicker and often gives a similar or better deduction for typical PHV mileage.
What are the current HMRC mileage rates for 2026/27?
For 2026/27, HMRC's approved simplified mileage rate for cars and vans is 55p per mile for the first 10,000 business miles, then 25p per mile after that. Motorcycles are a flat 24p per mile. These figures are set out in HMRC's simplified expenses guidance; always check the current figure there before relying on it.
| Vehicle type | Rate up to 10,000 business miles | Rate after 10,000 business miles |
|---|---|---|
| Car or van | 55p per mile | 25p per mile |
| Motorcycle | 24p per mile | 24p per mile |
The 10,000-mile threshold resets at the start of every tax year and applies per vehicle. Once you choose simplified mileage for a vehicle, you generally need to stick with that method for as long as you use that vehicle for the business, rather than switching between simplified and actual costs year to year.
Who is affected by Making Tax Digital for Income Tax in 2026?
MTD for Income Tax became mandatory from 6 April 2026 for self-employed people and landlords with total qualifying income above £50,000. According to HMRC's sign-up guidance, the threshold falls to £30,000 from April 2027 and £20,000 from April 2028, bringing most full-time drivers into scope soon.
If your combined self-employment and property income is currently below £50,000, you don't have to join MTD for Income Tax yet, but it's worth setting up digital mileage habits now so the transition is not a scramble later. Mileage claims also affect your Class 4 National Insurance bill, since Class 4 NIC is charged on profits after allowable expenses like mileage are deducted.
How does MTD change the way you record mileage?
Once MTD for Income Tax applies to you, your business records, including the trips behind any mileage claim, need to be kept in digital form and updated through MTD-compatible software rather than reconstructed from memory or paper at year end. The mileage figure itself doesn't change; what changes is how and how often you capture it.
In practice, that means each shift's journeys should be logged as you drive, in an app or spreadsheet that feeds your accounting software, rather than filled in from your Uber or Bolt trip history weeks later. HMRC's guidance on using software to send Income Tax updates confirms that records need to be digitally linked, meaning data should flow between your log and your quarterly submission without manual re-keying.
What counts as MTD-compatible for a driver's mileage log?
- A dedicated mileage-tracking app that exports trip data automatically to your accounting software.
- A spreadsheet that links, via bridging software, directly into your MTD submission rather than being retyped.
- Your Uber or Bolt driver app's trip log, cross-checked and imported into compatible software rather than used alone as your only record.
- Cloud bookkeeping software with a built-in mileage or vehicle-expenses module.
What has to be in a compliant mileage entry?
Each mileage entry HMRC expects to see during a check should record the date, the start and end points or postcodes, the business purpose, and the miles driven. Under MTD, this needs to exist in digital form ready to feed a quarterly update, not written up once a year from memory.
- Log each shift's start and end mileage, or use trip-level GPS tracking, as you drive rather than after the fact.
- Record the business purpose for each journey (for example, accepting fares, repositioning between jobs, or driving to a garage for a work-related MOT).
- Export or sync your log into MTD-compatible software at least weekly so it's ready when your quarterly deadline approaches.
- Reconcile your logged mileage against your Uber or Bolt trip history each quarter to catch gaps before you submit.
- Keep the underlying digital records for at least five years after the 31 January deadline for the relevant tax year, and check submitted figures in your HMRC online services account.
What does the mileage allowance vs actual costs comparison look like?
Most drivers who put in average annual mileage do better on simplified mileage once fuel, servicing, insurance, depreciation and finance costs are weighed against a flat per-mile rate. Actual costs can work out better for a low-mileage but expensive-to-run vehicle, or one with high finance costs, so it is worth comparing both methods before committing for the year.
| Factor | Simplified mileage allowance | Actual costs method |
|---|---|---|
| Record-keeping | Trip log: date, purpose, miles | Every receipt: fuel, insurance, servicing, MOT, finance |
| Calculation | Flat 55p/25p per mile (cars) | Business-use % of total running costs |
| Switching vehicles mid-year | Simple, per-vehicle threshold | Needs apportionment across vehicles |
| Best suited to | Most PHV/Uber drivers with typical annual costs | Very high-cost or low-mileage vehicles |
| MTD digital record needed | Digital mileage log | Digital record of every expense |
Illustrative example: a driver's quarterly mileage under MTD
What are the common mistakes drivers make with mileage under MTD?
The most common mistake is treating mileage as an annual chore rather than a quarterly one: drivers reconstruct trips from memory, round numbers, or mix commuting with business journeys. Each of these weakens your records under an HMRC check and can lead to a disallowed deduction or closer scrutiny of your whole return.
| Mistake | Why it's a problem | Possible consequence |
|---|---|---|
| Reconstructing mileage from memory at year end | Not a genuine digital record kept at the time | Records rejected in an HMRC check; deduction disallowed |
| Typing up a paper logbook into your return once a year | Fails the MTD digital-record and digital-link requirement once you're in scope | Non-compliance with MTD obligations |
| Mixing commuting with business mileage | Ordinary travel to a fixed base isn't a business journey | Overclaimed expenses and possible penalty on inaccuracy |
| Rounding trips to neat numbers | A common red flag in HMRC enquiries | Increased scrutiny of your whole return |
| Missing a quarterly update deadline | Still a compliance failure even in the soft-landing year | No penalty points in 2026/27, but late tax return or payment penalties still apply |
How Uber Driver Accountant helps
Uber Driver Accountant works exclusively with Uber, Bolt, private hire and taxi drivers, and is independent of Uber and Bolt. Fixed fees start from £20 a month, with no surprise bills for extra questions. For drivers moving into Making Tax Digital for Income Tax, we set up compatible software, help build a digital mileage routine that fits around your shifts, and handle your quarterly updates so nothing is left to a last-minute scramble. See our Making Tax Digital service for details.
Key terms
- MTD (Making Tax Digital): HMRC's programme requiring digital record-keeping and quarterly digital updates instead of one annual return.
- AMAP (Approved Mileage Allowance Payments): the technical name for HMRC's simplified per-mile rates.
- UTR (Unique Taxpayer Reference): the 10-digit number HMRC uses to identify your Self Assessment record.
- Bridging software: a tool that links a spreadsheet or existing system to HMRC's MTD service so data can be submitted digitally.
- POA (Payments on Account): advance payments toward next year's tax bill, based on your previous year's liability.
If your mileage claim also involves VAT, for example because you're VAT-registered or use the fuel scale charge, that's a separate set of rules from MTD for Income Tax. See our mileage allowance HMRC VAT FAQ for that side, and our guide to keeping HMRC-ready mileage records for more on logbook discipline. Our wider Making Tax Digital explainer for Uber drivers covers the broader MTD rollout beyond mileage, and drivers working nights or long shifts may also find our mileage allowance guide for Leeds night drivers useful for shift-pattern logging tips. You can estimate your own deduction with our mileage calculator.
Last reviewed 28 September 2026 by the Uber Driver Accountant tax team.
Ready to get your mileage records MTD-ready before your next quarterly deadline? Get in touch and we'll set you up, or see our pricing for fixed monthly fees from £20.
This article is general information, not personal tax advice. Every driver's circumstances differ, so speak to a qualified accountant before acting on it, and where HMRC disputes or penalties are involved, professional representation is recommended.
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