Mileage Allowances for MTD: Claiming Simplified Rates in Q1

Mileage Allowances for MTD: Claiming Simplified Rates in Q1

HMRC recently increased the Approved Mileage Allowance Payment (AMAP) rates for the first time in over a decade. If you drive for your business or rental property work, this affects what you can claim in your Q1 quarterly update. With around 50 days until the 7 August deadline, now is the right time to check you are recording mileage correctly and using the method that saves you the most tax. This post walks through simplified mileage rates, how they compare to actual expenses, and exactly how to record mileage to stay MTD-compliant.

What Are Approved Mileage Allowance Payments?

Approved Mileage Allowance Payments - commonly called AMAPs - are the rates HMRC allows you to use when claiming vehicle costs as a business expense. Instead of tracking every receipt for fuel, insurance, servicing, and depreciation, you simply multiply your business miles by the approved rate. HMRC accepts the result as a reasonable proxy for your actual costs.

The current AMAP rates following the recent increase are:

• Cars and vans: 28p per mile for the first 10,000 business miles in a tax year, 25p per mile after that
• Motorcycles: 24p per mile
• Bicycles: 20p per mile

These rates are for sole traders and landlords using the simplified expenses method. They are not the same as the mileage rates that employers use when reimbursing employees, though the name is similar.

Simplified Mileage Rates vs Actual Expenses: Which Should You Use?

This is the most common question, and the answer depends on your situation. You cannot switch between methods mid-way through owning a vehicle. The choice you make in the first year you use a vehicle for business sticks for the life of that vehicle in your accounts.

The simplified mileage method

You multiply your business miles by the AMAP rate and claim that total as an expense. Simple record-keeping. No need to apportion private versus business use of running costs. No need to keep fuel receipts or service invoices against the vehicle expense line.

This works well if:

• You do not drive a huge number of business miles
• Your vehicle is relatively fuel-efficient (running costs are low relative to the mileage rate)
• You want simple records with less admin
• Your vehicle is older and not especially expensive to run

The actual expenses method

You claim a proportion of your real vehicle costs based on how much you use the vehicle for business. So if 60% of your miles are business miles, you can claim 60% of your fuel, insurance, servicing, MOT, road tax, and capital allowances on the vehicle itself.

This can produce a larger deduction if:

• You drive a high-mileage, high-cost vehicle (diesel or large van)
• Your vehicle is expensive to insure or service
• Business use is a high proportion of total mileage
• You are comfortable keeping more detailed records

Neither method is universally better. Many sole traders with a single car find simplified rates perfectly adequate and much less work. Landlords who make occasional trips to properties often find the simplified method easier to justify and audit.

Who Can Use Simplified Mileage Rates?

Not everyone qualifies for the simplified expenses method. Here are the key rules:

• You must be a sole trader or partnership - limited companies cannot use AMAP rates for simplified expenses in the same way
• You must not have already claimed capital allowances on the vehicle in question
• The vehicle must be used at least partly for your business (sole trader) or for managing and maintaining your rental properties (landlords)

Landlords get a special mention here. HMRC allows landlords to claim mileage for journeys made in connection with the rental business - travelling to inspect a property, meeting a letting agent, going to collect rent, or attending to repairs. It does not cover purely personal journeys, even if they happen to pass a rental property.

What Counts as a Business Mile?

This is where people often make mistakes. Getting this wrong can lead to HMRC challenging your claim, so it is worth being precise.

For sole traders

Business miles include travel between different work locations, travel to meet clients or customers, travel to collect business supplies, and travel to temporary workplaces. Commuting from home to a fixed regular workplace does not count as a business mile, even if you are self-employed and that workplace is a client's office you visit every day.

For landlords

Business miles include travel to your rental properties to inspect or maintain them, travel to meet tradespeople, estate agents, or letting agents, and travel to suppliers for materials you are buying for the property. Personal detours during these journeys need to be excluded or estimated out.

If you have multiple properties, each journey to a different property can be logged separately. Good records here protect you if HMRC ever asks questions - and for landlords, they sometimes do. Our post on HMRC rental income enquiries and the records you need to keep covers this in more detail.

How to Record Mileage for MTD Compliance

MTD requires you to keep digital records of your income and expenses. Mileage is an expense, so it falls within this requirement. That does not necessarily mean you need a fancy app - it means your records need to be digital, accurate, and capable of producing the figures that go into your quarterly update.

What your mileage records should include

• Date of each journey
• Start and end location (or at least a clear description of purpose)
• Number of miles travelled
• Business purpose of the journey
• Running total of business miles for the tax year (so you know when you hit the 10,000-mile threshold for cars)

A simple spreadsheet works fine as a digital record, as long as it feeds into your MTD software accurately. You could also use a mileage tracking app and export the data. The key is that the figures are traceable - HMRC should be able to see how you arrived at your claimed total.

How mileage appears in your quarterly update

When you fill in your Q1 quarterly update, mileage costs claimed under the simplified method go into the relevant expense category for vehicle costs or travel expenses. In most MTD software, including bridging tools, there will be a field for motor expenses or travel. You enter the calculated mileage allowance total (miles x rate) as your expense figure for the period.

You do not enter the raw mileage number into your quarterly update - you enter the pound figure. So if you drove 1,200 business miles in Q1, and the rate for cars is 28p per mile, you would claim £336. That is the figure that goes into your expenses.

If you want help understanding what categories to use for expenses, our guide on allowable expenses for MTD covers the full picture.

The 10,000-Mile Threshold and How It Affects Q1

For cars and vans, the simplified mileage rate applies at different rates above and below 10,000 miles per tax year. The higher rate applies to the first 10,000 miles, and the lower rate applies to anything above that.

Q1 covers 6 April to 5 July. Most people will be well below 10,000 miles at this point in the tax year, so the higher rate applies to all Q1 mileage. But if you drive a lot for work - deliveries, site visits, field sales - you should track your running total carefully. Once you cross 10,000 miles in the year, the rate changes for every mile after that.

Keep a running total in your mileage log. Do not wait until year-end to calculate this - it becomes much harder to reconstruct accurately if you leave it.

Common Mileage Mistakes to Avoid

These come up regularly when people file their quarterly updates and tax returns:

1. Mixing up AMAP rates with employer reimbursement rates. The rules work differently for employees and self-employed people. As a sole trader or landlord, you are using simplified expenses, not employee reimbursement rules.
2. Claiming home-to-work commuting as business mileage. If you drive to the same client or workplace every day, HMRC treats that like commuting, not business travel.
3. Not keeping a contemporaneous log. Reconstructing mileage from memory at the end of the year is not reliable and HMRC knows it. Log journeys as you go, ideally daily or weekly.
4. Using simplified mileage for a vehicle you already claimed capital allowances on. If you claimed capital allowances in a previous year for a vehicle, you must stick with actual expenses for that vehicle.
5. Forgetting to split personal and business mileage. If you use the same vehicle for personal and business use (which most people do), you can only claim the business portion.

If you have already submitted something and spotted an error, take a look at our post on Q1 MTD submission errors and how to fix them.

Mileage for Landlords: A Specific Note

Landlords sometimes underestimate how much mileage they can legitimately claim. If you manage properties yourself rather than using a letting agent, you are likely making frequent journeys. Inspection visits, arranging repairs, meeting prospective tenants, dealing with contractors - these all count.

The condition is that the journey must be wholly and exclusively for your property rental business. If you make a personal stop on the way, you should either exclude that journey or estimate the business-only portion carefully.

Landlords with multiple properties or mixed income sources - for example, rental income alongside self-employment - need to keep mileage records for each income stream separately if they are submitting separate quarterly updates. See our guide on mixed income and MTD for landlords for more on how this works practically.

How AffordableMTD Handles Mileage

AffordableMTD is bridging software, which means it takes your expense figures and submits them to HMRC in the correct format. You calculate your mileage allowance total (miles x rate) outside the software - in a spreadsheet, mileage log, or app - and then enter the resulting pound figure into the relevant expense field.

This keeps things simple. You are in control of your mileage calculation, and the software handles the MTD submission. If you are uploading a CSV of expenses, make sure mileage is included as a categorised expense line. Our post on importing Q1 expenses via CSV and AI categorisation explains how the upload process works.

Getting Q1 Right Before the 7 August Deadline

You have around 50 days to get your Q1 quarterly update right. That is enough time to sort out your mileage records properly if you have not already. Here is what to do now:

• Pull together your mileage log for 6 April to 5 July
• Confirm which method you are using - simplified or actual expenses
• Calculate your mileage allowance total using the correct AMAP rate
• Check whether you have crossed the 10,000-mile threshold (unlikely in Q1 for most people, but worth checking)
• Enter the pound figure into your expense records, ready for your quarterly update

If you want a broader pre-submission checklist, our Q1 final checks before 7 August covers everything you need to review before you file.

Mileage is one of those areas where getting it right is mostly about consistent record-keeping rather than complex calculation. The new AMAP rates make this a good moment to revisit your approach, make sure you are using the right method, and confirm your records are complete for Q1. Once this quarter is done, the habits you build will make Q2 and beyond much easier.