How do vehicle expenses work when you're self-employed?
If you use a car, van or other vehicle for your self-employed business, qualifying costs can reduce the profit on which your Income Tax is calculated.
The way you claim depends on factors including the type of vehicle, whether you own or lease it, your accounting basis, private use and whether you use HMRC's simplified mileage method.
You normally need to decide whether the vehicle will be dealt with using simplified mileage or through its actual allowable costs. Buying a vehicle can also involve capital allowances or different cash-basis treatment.
Does HMRC treat a car and a van differently?
Yes. The distinction can matter particularly when a vehicle is purchased and capital allowances are being considered.
For capital-allowance purposes, a car is broadly a vehicle that is suitable for private use and was not built primarily for transporting goods.
Vans, lorries and trucks do not generally count as cars for these rules and can therefore qualify for allowances that are not available for cars.
| Vehicle | General tax distinction |
|---|---|
| Car | Has specific capital-allowance rules. The available rate can depend on matters such as CO₂ emissions and when the car was bought. |
| Van | Generally treated as plant and machinery rather than as a car, so different capital allowances can potentially be available. |
| Lorry or truck | Generally not treated as a car for capital-allowance purposes. |
| Motorcycle | Generally not treated as a car for these capital-allowance rules. |
Vehicle classification can be technical. If the tax treatment depends on whether a particular model counts as a car or goods vehicle, check the characteristics of the actual vehicle rather than assuming from its marketing description.
Can you claim the cost of buying a business vehicle?
Potentially, but buying a vehicle is not always treated in the same way as buying fuel or paying an insurance bill.
The cost of acquiring a vehicle can be treated as capital expenditure, dealt with under capital-allowance rules, or handled differently where the cash basis applies.
Buying the vehicle and running the vehicle are separate tax questions
Fuel, servicing, insurance and repairs are running costs. Purchasing a vehicle creates a business asset and can involve separate rules.
What are capital allowances on business vehicles?
Capital allowances are a form of tax relief that can allow a business to deduct some or all of the value of qualifying equipment, machinery and business vehicles from profits.
Under traditional accounting, self-employed businesses may need to use capital allowances when buying vehicles such as cars, vans, lorries or other qualifying business assets.
Which allowance is available depends on the vehicle and the applicable capital-allowance rules.
How are business cars treated?
Cars have their own capital-allowance regime.
HMRC currently says cars do not qualify for the Annual Investment Allowance. Instead, depending on the car, its emissions and when it was acquired, a business may use an appropriate writing-down allowance or potentially a qualifying first-year allowance.
Writing-down allowances
Many business cars are relieved over time under the relevant capital-allowance pool rather than receiving an immediate full deduction.
Some zero-emission cars
Certain qualifying new and unused zero-emission cars can have more favourable first-year capital-allowance treatment, subject to the rules in force when the vehicle is bought.
For a sole trader or partnership where the car is also used privately, the claim needs to reflect the appropriate business use.
How are vans and goods vehicles treated?
Vans and other goods vehicles are generally not treated as cars under the capital-allowance rules.
This can mean allowances such as the Annual Investment Allowance may be available where the relevant conditions are met.
The difference can materially affect when tax relief is received
A qualifying van may be eligible for allowances that are not available on a car. That is one reason vehicle classification matters before completing the tax calculation.
What happens if you use cash-basis accounting?
Cash-basis treatment differs from traditional accounting.
HMRC currently says that if a sole trader or partnership uses the cash basis, capital allowances are generally only claimed on business cars.
Other qualifying items bought and kept for the business are generally dealt with through normal business expenses under the cash basis.
Under the cash basis, the purchase of a business car can still require capital allowances unless simplified vehicle expenses are being used.
Can self-employed people claim leased or hired vehicle costs?
Qualifying hire and leasing costs can form part of actual business vehicle expenses, subject to the relevant rules and any required restriction for private use.
If you instead use simplified mileage for the vehicle, the flat mileage rate is designed to cover costs connected with acquiring, owning, hiring, leasing and using the vehicle.
You should therefore avoid claiming the mileage rate and then separately deducting the same vehicle's lease or hire costs.
What actual vehicle running costs can be claimed?
Where you use the actual-cost method, potentially allowable business vehicle costs can include:
- Fuel.
- Vehicle insurance.
- Repairs.
- Servicing.
- MOT costs.
- Vehicle tax and relevant licence costs.
- Breakdown cover.
- Qualifying hire charges.
- Business parking.
Only the allowable business element should be included where the vehicle also has private use.
Can you use simplified mileage instead?
Eligible sole traders and qualifying partnerships can use HMRC's simplified mileage method for cars, eligible goods vehicles such as vans, and motorcycles.
| Vehicle | 2026/27 simplified rate |
|---|---|
| Cars & goods vehicles | 55p per business mile for the first 10,000 miles. |
| Cars & goods vehicles | 25p per business mile after 10,000 miles. |
| Motorcycles | 24p per qualifying business mile. |
The mileage rate covers the normal costs of buying, owning, hiring, maintaining and running the vehicle.
Qualifying incidental journey costs such as business parking, tolls or congestion charges are not included in the mileage rate and can potentially be dealt with separately.
For the full mileage rules, read our Self-Employed Mileage & Fuel Guide .
Can you use mileage after claiming capital allowances?
Generally no. HMRC says simplified mileage cannot be used for a vehicle where capital allowances have already been claimed on that vehicle, or where the cost has already been dealt with in an incompatible way when calculating business profits.
Can you switch from mileage to actual costs?
Once you choose simplified mileage for a vehicle, HMRC generally requires that method to continue for as long as that vehicle is used in the business.
What happens if you use the vehicle privately?
A self-employed vehicle does not have to be used exclusively for business, but you cannot normally deduct private expenditure.
Simplified method
Only qualifying business miles are included. Private mileage is excluded from the calculation.
Actual-cost method
Mixed running costs generally need to be apportioned so that only the business element is deducted.
Personal journeys remain private expenditure. The tax treatment depends on the purpose of the journey and the nature of the business use.
What happens when you sell or replace a business vehicle?
The tax consequences depend on how the vehicle has previously been treated.
If capital allowances have been claimed, the sale or disposal can affect the capital-allowance calculation.
If simplified mileage has been used, the vehicle has already been dealt with through the mileage regime rather than separate capital allowances.
Because the tax result can depend on the original method, keep records showing how each business vehicle has been treated from the time it entered the business.
What vehicle records should you keep?
Good records are especially important where you need to establish business use, actual costs or the history of a capital-allowance claim.
Keep purchase or lease documents
Retain invoices, finance agreements, lease documentation and details of when the vehicle entered the business.
Record running costs
Keep invoices and receipts for fuel, insurance, servicing, repairs and other costs where you use the actual-cost method.
Track business mileage
Maintain a mileage record where you use simplified expenses or need evidence to calculate business versus private use.
Record the method used
Keep a clear record of whether each vehicle is being treated using mileage, actual costs or capital allowances so that future claims remain consistent.
For the wider expense rules, see our Self-Employed Allowable Expenses Guide .
Reviewed & Updated
18 August 2026
2026/27
GO TAX REFUNDS
HM Revenue & Customs / GOV.UK
Vehicle tax treatment depends on factors including vehicle classification, business use, private use, accounting method, acquisition method and previous claims. This guide provides general information rather than determining the treatment of a particular vehicle.
Self-Employed Van & Vehicle FAQs
Can a self-employed person claim the cost of a van?
Potentially. The treatment depends on your accounting basis and how the vehicle is being claimed. Vans can be treated differently from cars for capital-allowance purposes.
Is a van treated differently from a car for tax?
Yes, particularly under the capital-allowance rules. Cars have specific restrictions and rates, while qualifying vans and other goods vehicles can potentially qualify for allowances unavailable to cars.
Can I claim 100% of my van costs?
Not automatically. If the van is also used privately, a sole trader normally needs to exclude or restrict the private element of the claim.
Can I use the 55p mileage rate for a van?
Eligible goods vehicles can use HMRC's simplified mileage method. For 2026/27, the rate is 55p per business mile for the first 10,000 miles and 25p thereafter.
Can I claim fuel on top of mileage?
Not for the same vehicle. The simplified mileage rate already covers fuel and the normal costs of owning, maintaining and running the vehicle.
Can I claim parking as well as mileage?
Qualifying business parking and certain other incidental journey costs can potentially be claimed separately because they are not included within the simplified mileage rate.
Can I claim capital allowances and mileage on the same vehicle?
Generally no. HMRC does not allow simplified mileage for a vehicle where capital allowances have already been claimed on that vehicle.
Can I change from mileage to actual costs next year?
HMRC generally requires you to continue using the simplified mileage method for that vehicle once you have adopted it, for as long as the vehicle remains in the business.
HMRC & GOV.UK Sources
This guide is reviewed against current HMRC guidance covering business vehicles, simplified expenses and capital allowances.
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