The Complete Guide to Tracking Business Mileage

For anyone in the UK who drives for work-related purposes, maintaining an accurate mileage log is a critical task. Whether you’re self-employed, running a business, or an employee seeking reimbursement, a properly documented log ensures you stay compliant with HMRC requirements and maximize your allowable expenses. Let’s explore in detail why a mileage log is important, how to keep one, and other essential tips to make the process simpler.

Why a Mileage Log Is Essential

A mileage log is more than just a record of your journeys—it’s a financial tool and a legal necessity. Here are the key reasons why keeping a mileage log is crucial:

1. Tax Compliance:HMRC requires detailed and accurate mileage records to support your expense claims. Without a proper log, your claims may be disallowed, resulting in penalties or reduced tax relief.

2. Financial Benefits:Claiming business mileage allows you to recover part of your travel costs through reimbursement or tax deductions. For self-employed individuals, it can significantly reduce taxable income, while employees can ensure they aren’t out of pocket for business travel.

3. Audit Protection:In the event of an HMRC audit, your mileage log acts as evidence of your claims. Failure to produce accurate records can result in fines or additional tax assessments.

4. Business Insights:For business owners, mileage logs provide insights into travel costs, allowing better financial planning and identifying areas for savings.

What Information Should Be Included in a Mileage Log?

A mileage log should capture all relevant details about your business journeys. The following elements are essential to meet HMRC standards:

1. Date of Travel:Include the exact date for each journey to establish a clear timeline.

2. Start and End Locations:Record the addresses or postcodes of your journey's start and end points. This ensures transparency and allows HMRC to verify the distance traveled.

3. Purpose of Journey:Provide a brief but specific description of the trip's purpose, such as “client meeting,” “site visit,” or “delivery of goods.”

4. Mileage Covered:Note the total distance traveled in miles for each journey.

5. Odometer Readings (Optional but Useful):Including the starting and ending odometer readings adds another layer of accuracy and can help verify the mileage covered.

6. Vehicle Details:Record the make, model, and registration number of the vehicle used, especially if you alternate between multiple vehicles.

What Types of Journeys Can You Claim?

HMRC allows claims for business-related mileage only. This includes:

1. Client Meetings:Visiting clients at their premises.

2. Travel Between Work Locations:Moving between multiple workplaces or offices.

3. Deliveries or Collections:Transporting goods, equipment, or materials for business purposes.

4. Temporary Worksites:Traveling to a site where you’ll be working temporarily (less than 24 months).

Important: Commuting between your home and your regular workplace is not considered business mileage and cannot be claimed.

How to Keep a Mileage Log

There are two main approaches to keeping a mileage log: manual and digital.

Manual Logs:

Traditional methods involve using a notebook or spreadsheet to record each trip. While this method is cost-effective, it requires discipline and regular updates to ensure accuracy.

Simple Mileage Log Template

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Digital Mileage Tracking Apps:

Modern apps like QuickBooks Self-Employed offer automated tracking using GPS. These tools:

• Automatically log trips as you drive.

• Allow you to categorize trips as business or personal with a swipe.

• Generate HMRC-compliant reports instantly.

Although these apps come with a subscription cost, but they save significant time and reduce the risk of errors.