How does mileage work in Making Tax Digital?

You log business miles through the year, then add the flat-rate claim (55p a mile up to 10,000 miles in 2026-27, 25p after) once your fourth quarterly update is sent and before your tax return.

Making Tax Digital for Income Tax (MTD) changes how you report, not what you can claim. The mileage rules are the same simplified expenses rules sole traders have used for years. What is new is when the claim reaches HMRC. The rules below follow GOV.UK and HMRC's Business Income Manual as checked on 16 October 2026.

The two ways to claim for your van

You choose one method for each vehicle, and once you use the flat rate for a van you keep using it for as long as that van is in the business.

You cannot use the flat rate for a van whose cost you have already claimed, either through capital allowances or as an expense. HMRC's manual says a business can switch method only when it replaces the vehicle.

Where the flat-rate claim fits in MTD

Quarterly updates are running totals of your income and costs, sorted into the same categories as Self Assessment. "Car, van and travel expenses" is one of them. GOV.UK says you do not need to make tax adjustments before sending a quarterly update, and that simplified expenses are dealt with as an adjustment before you finalise your tax position.

So, if you use the flat rate:

• Your quarterly updates leave out fuel, insurance and repairs for that van.
• After the fourth update, you add the year's mileage claim in your software, before submitting the tax return.
• Parking, tolls and congestion charges for business trips are not covered by the rate, so they go into your quarterly updates as normal costs.

One side effect: the tax estimate you see after each quarterly update is based on what you have sent. It will look higher than your final bill until the mileage claim is added.

A worked example

A plumber drives 13,400 business miles in 2026-27 and uses the flat rate. Here is how the miles build up against the update periods.

The year-end claim is 10,000 miles at 55p (£5,500) plus 3,400 miles at 25p (£850), which is £6,350. That figure is added once, before the 2026-27 tax return. The right-hand column is only for the plumber's own view of where the year is heading. This is an example, not a recommendation of either method.

What counts as a business mile

HMRC's manual says the rate is for journeys made wholly and exclusively for the business, and that a record of business mileage should be kept at the time. Private journeys, including ordinary travel between home and work, do not count, and nor do trips that mix business and private purposes. For a subcontractor moving between sites, the guide on travel from home to site covers which trips qualify.

A good log is one made at the time: each business journey, its date and purpose, and the miles driven. The flat-rate claim is only as good as that record.

What this means for you

If you drive one van and want the least paperwork, the flat rate fits MTD well: no van receipts in your quarterly records, one figure added at the year end. Keep the mileage log going from 6 April, because that log is what supports the claim. If you have not decided, record the van's costs as you go. GOV.UK suggests this when you are unsure, and for a van new to the business it keeps both options open until you file. For a van you already had, stay with the method you used before, because HMRC's manual allows a change only when the vehicle is replaced. If you bought the van and claimed its cost, actual costs is your route for that van.

Steps to get mileage right under MTD

1. Check whether you have ever claimed this van's cost, and which method you used for it last year. If you claimed its cost, use actual costs for it.
2. Decide on a method for the van, or record all its costs if you are unsure.
3. Start a business mileage log from 6 April, with date, journey, purpose and miles.
4. Record parking and tolls as costs in your software, whichever method you use.
5. After the fourth quarterly update, total the year's business miles and add the flat-rate claim before you submit the tax return.

The free MTD check shows when MTD starts for you, and the trades section has more on MTD for tradespeople. The van mileage guide compares the two methods in more detail.