How much to charge for mileage in the UK: Travel expenses for tradespeople

When it comes to calculating travel expenses as a tradesperson, you may be wondering how much to charge customers for mileage. In this guide, we'll explain the factors you need to consider when setting your mileage rates while accounting for other travel expenses and staying compliant with HMRC rules.

To avoid misunderstandings and improve customer satisfaction, it’s essential to be highly transparent and precise when calculating your travel expenses. This article will show you how to work out your travel expenses correctly, and how digital tools can significantly simplify travel cost management and calculation. We will also explain what factors you should consider to ensure your invoicing is always fair, clear and efficient. 

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Travel expenses in the trades: Accuracy pays off

Travel expenses don’t just include direct fuel costs but also vehicle depreciation, insurance, maintenance, and time spent travelling by employees. Properly recording and calculating these expenses is critical, as they will directly influence the profitability of a job.

In practice, good cost calculations will ensure fair pricing, form the basis for customer negotiations, and contribute to transparency in your business. Route planning and digital tools can cut costs and save time.

HMRC's recommended mileage rate for the UK

HMRC recommends a reimbursement rate of 45p per mile for the first 10,000 miles, however many businesses charge higher rates due to factors like vehicle wear and tear or long distances. You can find further details on allowable travel expenses, including the standard HMRC mileage rate, here on the official government website. What you choose to charge customers is your decision, but it’s important to be fair and transparent at all times.

How to accurately calculate mileage and other travel expenses

For many tradespeople, how much you charge for mileage depends on multiple factors and can be different for each business. To help with this, you should consider both HMRC’s recommended rates and your own business costs when calculating mileage charges. This ensures you're charging enough to cover your expenses while remaining fair and transparent with customers.

• Flat rate: Many businesses set a flat rate for travel expenses, which is charged regardless of the actual distance. This rate typically covers the first few miles and may vary depending on the region and industry.‍
• Rate per mile: Beyond the flat rate, additional costs per mile may be charged. These costs often reflect the vehicle’s expenses, such as fuel or wear and tear. ‍
• Time-based costs: Some tradespeople also charge for their travel time, particularly when it affects regular working hours. These costs are often factored into the hourly labour rate.‍
• Regional factors: In certain areas, additional costs like parking or tolls may apply and should be included in the total calculation.

HMRC recommends 45p per mile for the first 10,000 miles for cars and vans. 45p per mile is the highest allowance that you can be reimbursed for but you can charge above it if you want to. Many tradespeople charge customers more than 45p per mile due to factors such as: higher vehicle running costs, long distances to account for travel time, parking fees and congestion charges.

Example mileage expense calculation for tradespeople

Here’s a helpful formula for calculating your mileage expenses:

Mileage expenses = Flat rate + (Rate per mile × Number of miles)

Flat rate: A fixed amount covering initial costs for the first miles, which varies by business and region.

Rate per additional mile: Charges for additional miles not covered by the flat rate. Here you can account for other travel costs such as fuel, wear and tear, and potentially time costs.

Number of miles: Total distance travelled, minus the miles covered by the flat rate.

Example calculation without labour costs

Say you are an electrician with a flat rate of £20 for the first 5 miles and a charge of 45p for each additional mile. For a 20-mile trip:

• Flat rate: £20
• Rate per additional mile: 45p
• Number of miles: 20 - 5 = 15 miles
• Mileage to charge = £20 + (15 × 45p) = £20 + £6.50 = £26.75

HMRC travel expense guidelines: What can tradespeople claim?

If you’re claiming travel expenses as a contractor or business, it’s essential to know what’s permissible under HMRC guidelines. HMRC allows you to deduct both direct and indirect travel expenses as business costs, including things like fuel, vehicle depreciation, and insurance, as long as you can show they're for business purposes. Keeping accurate records of fuel, mileage and these other costs is essential for claiming them in your tax return and avoiding issues with HMRC.

When it comes to tax reporting, you can claim HMRC’s mileage rates as business expenses, regardless of what you charge customers. The mileage rates, which have been consistent since 2011, are as follows:

• 45p per mile for the first 10,000 miles for cars and vans (25p after 10,000 miles)
• 25p per mile after that for cars and vans
• 24p per mile for motorcycles
• 20p per mile for cycles

Example calculation for mileage claim

Say you are a plumber who has completed a 1,000 miles total in a month and are submitting a mileage claim on your tax return.

For a 50-mile trip:

• HMRC rate per mile: 45p
• Number of miles: 1,000 miles
• Claimable mileage = 1,000 x 45p = £450

For more information on what you can claim as a self-employed individual, see the HMRC Self-Employed Expenses Guide.

Two tips to reduce travel costs

Reducing travel expenses is key to profitability and customer satisfaction, as customers prefer not to overpay for travel. Here are two tips:

1. Flexible service times:
   Offering services during off-peak hours can help your team avoid traffic, saving time and fuel.
2. Strategic route planning:
   Plan your appointments by location so you can group customers in the same area and cut down on extra travel.

Keep travel costs on track with ToolTime

ToolTime has a range of features specifically designed to help tradespeople simplify their everyday tasks, including managing travel expenses. With our intuitive route planning, time tracking and invoicing features, ToolTime makes tracking expenses and billing for them easy. Find out more about how trade businesses like Insite Property Maintenance, use ToolTime to manage their invoicing and other paperwork.

Conclusion: Mileage rates for tradespeople

Managing travel expenses efficiently is key for tradespeople to stay profitable and keep customers happy. Using digital tools like GPS and specialised software like ToolTime can help with accurate calculations, making sure costs stay clear and low.

Looking ahead to the future, eco-friendly vehicles could lower costs even more and show customers you're environmentally conscious which will in turn boost your reputation. 

By embracing the latest tech, trade businesses can improve profits and stay ahead of the competition. Job management software like ToolTime helps streamline operations, setting businesses up for success in the future.

FAQs

What is a fair mileage charge UK?

A fair mileage charge for UK tradespeople can vary depending on the region, vehicle type and current fuel prices. Typically, a fair charge is between 45p and 50p per mile based on HMRC’s recommended rates. This recommended rate covers the costs of fuel, vehicle wear and tear and other running costs. In areas where fuel and other costs are higher, tradespeople may charge up to 60p per mile.

As a trade business, can I deduct my travelling expenses from my taxes?

Yes, as a trade business, you can deduct travel expenses from your taxes as long as they are clearly for business purposes. However, you must have an accurate record and receipts for these journeys so that you can claim them on your tax return.

How do I invoice travel expenses correctly?

It’s important to keep detailed records of all business-related travel to invoice travel expenses accurately. For each trip, note the date, purpose, miles driven, and any other costs like parking or tolls. These records will help you invoice correctly and make tax returns easier.

How can I calculate my travel expenses?

To calculate your travel expenses, consider all costs like fuel, maintenance, wear and tear, and the driver’s working hours. Add these costs together and divide by the miles driven to get the cost per mile. This figure can then be used for invoicing.