55p Mileage Allowance: Step-by-Step Bookkeeping for the 10,000-Mile Switch to 25p

The 55p mileage allowance covers your first 10,000 business miles in the 2026/27 tax year, and every business mile after that is worth 25p. If you drive full-time, you will probably cross that line somewhere between November and February, and the month you cross is where most bookkeeping errors start.

This guide sets out a monthly routine for that switch. It shows how to keep a running total, forecast the crossing month, split it cleanly, handle a second car and carry the right figures into Making Tax Digital (MTD) quarterly updates. It assumes you already keep a trip log; if you do not, start with our guide to what an HMRC mileage log should record.

Key takeaways

• The 55p mileage allowance applies to the first 10,000 business miles in 2026/27, then 25p per mile, and the band resets on 6 April each year.
• Keep a cumulative business-mile total updated at every month end, not just a monthly figure, so you can see the crossing coming.
• Split the crossing month at exactly 10,000 miles: the headroom left goes at 55p and the balance at 25p.
• On the wording of the legislation, all cars on the flat rate share one 10,000-mile band for the business.
• MTD quarterly updates are year-to-date, so your running total lines up with what each update reports.

What is the 55p mileage allowance?

The 55p mileage allowance is HMRC's flat rate for self-employed people who use simplified expenses for a car or van. For 2026/27 you claim 55p for each of your first 10,000 business miles and 25p for each mile after that, instead of claiming actual running costs.

According to GOV.UK's simplified expenses guidance for vehicles, the first-band rate is 55p for 2026/27 and was 45p before 6 April 2026, while the rate after 10,000 miles stays at 25p. The government's policy paper on the increase confirms the change takes effect from 6 April 2026, so it covers the whole tax year even though it was announced later.

Why does the 10,000-mile switch need its own bookkeeping routine?

Because the 55p mileage allowance changes to 25p partway through your year, a monthly mileage figure on its own tells you nothing about its value. You need to know how many 55p miles you have already used. Without a running total, drivers often keep booking 55p after the band is full, or switch to 25p too early.

For a part-time driver who never reaches 10,000 business miles, the 55p mileage allowance applies to every mile and month-end bookkeeping is a single multiplication. For a full-time driver doing 1,000 or more business miles a month, the value per mile drops by more than half at a point that is different every year. That one moment affects your in-year profit figures, your quarterly updates and how easily your return can be checked later.

The good news is that the annual claim is fixed by a simple formula: 10,000 miles at 55p plus the remainder at 25p. The routine below does not change that answer. It makes sure your monthly records agree with it, so nothing needs reworking in January.

Is the 10,000-mile limit per vehicle or per business?

On our reading of the law, it is per business, not per vehicle. Section 94F of the Income Tax (Trading and Other Income) Act 2005 limits the 55p rate to 10,000 of the total business miles made in the period by every car or goods vehicle that your trade claims on the flat rate.

The wording in section 94F on legislation.gov.uk refers to the total number of miles of relevant business journeys made in the period, without tying the band to a single vehicle. A relevant business journey is one made by a car or goods vehicle that is used for the trade and is on the flat-rate basis. GOV.UK's public guidance and HMRC's Business Income Manual at BIM75005 give single-vehicle examples and do not state the point directly, so treat this as our interpretation and check it against your own circumstances.

In practice this means a spare car you use while your main car is off the road does not bring a fresh 55p mileage allowance band. Its business miles join the same running total. A car you claim on actual costs is different: its miles are not relevant business journeys for the flat rate, so keep them in a separate log.

How do you run the 55p mileage allowance month by month?

Set your bookkeeping months to run from the 6th to the 5th, total each month's business miles per vehicle, add them to a single running total, then check how much 55p headroom is left. When a month's miles exceed the headroom, split that month and record both parts.

Running months from the 6th to the 5th matches the tax year and the standard MTD quarters, which saves a lot of reconciling later. Use the steps below at every month end. They take about fifteen minutes once your daily log is up to date.

1. Fix your periods. Use twelve bookkeeping months from 6 April to 5 April, so each quarter end (5 July, 5 October, 5 January, 5 April) falls on a month end.
2. Close the daily log. Make sure every shift in the month has its business miles entered, then note the odometer reading for each vehicle on the last day of the month.
3. Total business miles per vehicle. Add up each car's business miles for the month, and keep any car claimed on actual costs in its own separate column.
4. Update the running total. Add the flat-rate vehicles' miles together and add them to the cumulative business-mile figure brought forward from last month.
5. Check your headroom. Subtract last month's cumulative total from 10,000. If this month's miles fit inside that headroom, value them all at 55p.
6. Split the crossing month. If this month's miles exceed the headroom, value the headroom at 55p and the balance at 25p, and write the date and shift on which the total passed 10,000.
7. Record the value to date. Enter the month's mileage value and the cumulative value to date, so any quarter end can be read straight off the sheet.
8. Forecast the crossing. Before the switch, divide the remaining headroom by your average monthly business miles to estimate which month will be split.
9. Lock the month. Save a copy of the log and the month-end odometer photos, and do not edit a closed month without noting the correction and the date you made it.

If you want to sanity-check a month's value, our mileage calculator applies the 55p and 25p bands for you. The aim is that your spreadsheet and the calculator always agree on the cumulative figure.

How do you split the month you cross 10,000 miles?

Work out how many 55p miles were left at the start of the month, value exactly that many at 55p, and value the rest of the month's business miles at 25p. Note the date and shift where the running total reached 10,000, so the split can be traced back to your log.

The 55p mileage allowance split is a month-level calculation, but it should match the order of your journeys. Miles driven before the crossing point take the higher rate and miles after it take the lower rate. If the crossing happens in the middle of a single trip, apportion that trip; our step guide on counting business miles and apportioning a trip that crosses 10,000 covers that detail, so it is not repeated here.

Write the crossing details in a notes column rather than relying on memory. Something as short as 'band full 28 Dec, evening shift, 800 at 55p, 350 at 25p' is enough for anyone checking your records later, including HMRC if it ever asks.

Which situations change the split? A decision table

Most months under the 55p mileage allowance are routine. The table below covers the situations we see most often around the switch, with the band that applies and what to write down. It is our own working checklist, built from the legislation and GOV.UK guidance cited above.

Can you switch a car between flat rate and actual costs at the 10,000-mile point?

No. Once you use the flat rate for a vehicle, you must keep using it for as long as that vehicle stays in the business. Reaching 10,000 miles does not give you a chance to move the same car onto actual costs for the rest of the year.

GOV.UK says that once you use the flat rates for a vehicle you must continue to do so while you use it for business, and HMRC's BIM75005 adds that a business can only change to or from an actual basis when a vehicle is replaced. The point to decide is therefore when you buy or lease a car, not when the band runs out. If you are weighing that decision now, our guide to allowable expenses for ride-hailing drivers sets out what actual costs would cover.

What should you record for MTD quarterly updates?

MTD quarterly updates show year-to-date totals from 6 April, so keep your cumulative business miles and their cumulative value at each quarter end. GOV.UK says simplified expenses need an adjustment before you finalise your Income Tax position, so check how your software handles the flat rate in-year.

MTD for Income Tax applies from 6 April 2026 if your qualifying income is above £50,000, falling to £30,000 from April 2027 and £20,000 from April 2028. According to GOV.UK's guidance on sending quarterly updates, each update covers the tax year so far. Under the standard periods the updates run to 5 July, 5 October, 5 January and 5 April, due by 7 August, 7 November, 7 February and 7 May.

That year-to-date design suits the 55p mileage allowance switch at 10,000 miles. Your quarter-end running total is exactly the figure an update needs, and if you correct a mistake, GOV.UK says the correction goes into your next update. GOV.UK's digital records guidance also says that if you use simplified expenses you will need to make an adjustment for this before you finalise your Income Tax position. Our MTD update on mileage records covers who is affected and what each log entry needs.

For most full-time drivers, the quarter that contains the switch is the third one, ending 5 January. That is the update where a mistake shows most clearly, because the value per mile has changed but the miles keep climbing at the same pace.

Illustrative example: a full-time driver crosses 10,000 miles in December

Illustrative example. Kemi is an invented full-time private hire driver who claims the 55p mileage allowance for one main car. She keeps bookkeeping months from the 6th to the 5th. Her business miles for 2026/27 are shown below; in February she also drove a spare car on the flat rate for 400 of that month's 1,050 business miles while her main car was repaired.

At the end of the sixth month, Kemi had 3,220 miles of headroom left and was averaging 1,130 business miles a month. Her forecast put the crossing just under three months away, in the month starting 6 December. That is what happened: she began that month with 800 miles of headroom, so 800 miles went at 55p (£440.00) and the other 350 at 25p (£87.50), giving £527.50 for the month.

Her year-end check is simple. 10,000 miles at 55p is £5,500 and 3,840 miles at 25p is £960, so the total is £6,460, matching the last line of the table. Her year-to-date figures at each quarter end were 3,350 miles (£1,842.50), 6,780 miles (£3,729.00), 10,350 miles (£5,587.50) and 13,840 miles (£6,460.00).

The spare-car miles in February did not start a new band. They were added to the same running total and, because the band was already full, valued at 25p. Had Kemi given the spare car its own 10,000 miles at 55p, she would have overclaimed £120 on those 400 miles, which is exactly the kind of error an HMRC check looks for.

What are the common mistakes at the 10,000-mile switch, and what can they cost?

The usual errors are carrying on at 55p after the band is full, giving a second car its own band, splitting by calendar month instead of tax month, and forgetting that the band resets on 6 April. Each one overstates or understates expenses, and an overstatement can lead to extra tax, interest and a penalty.

• Booking the 55p mileage allowance all year. This overstates expenses on every mile after 10,000. If HMRC finds it, you pay the extra tax with interest, and a penalty can follow if the error is judged careless.
• A separate band for each car. Treating a spare or replacement car as having its own 10,000 miles at 55p overclaims in the same way, and is hard to defend against the wording of section 94F.
• Splitting by calendar month. Using 1st-to-31st months makes quarter-end totals drift from the MTD periods, so figures need reworking and errors creep in at each update.
• Not resetting on 6 April. Carrying the 25p rate into the new tax year understates your expenses, so you pay more tax than you need to.
• Rebuilding the year in January. Reconstructing the crossing month from memory makes the split impossible to evidence. Our guide to what to do if HMRC questions a 55p claim explains how penalties and corrections work.

Key terms

• Business mile: a mile driven wholly and exclusively for your driving business, as shown in your log.
• Simplified expenses: HMRC's optional flat-rate method for some costs, including vehicles, used instead of actual costs.
• Running total: your cumulative business miles from 6 April, updated at each month end.
• Headroom: the number of 55p miles left in the 10,000-mile band at a given point in the year.
• Crossing month: the bookkeeping month in which your running total passes 10,000 business miles.
• MTD (Making Tax Digital) for Income Tax: HMRC's system of digital records and year-to-date quarterly updates for qualifying sole traders and landlords.
• Quarterly update: a year-to-date summary of income and expenses sent to HMRC through compatible software.

How UK Driver Accountants helps

We work only with drivers, on fixed fees from £20 a month, and we are independent of any ride-hailing app. Our bookkeeping service for drivers sets up a 55p mileage allowance sheet with the running total, headroom and crossing-month split built in, and we review it at each quarter end so your figures are right before they reach HMRC.

If MTD applies to you, our Making Tax Digital service handles the quarterly updates and the simplified expenses adjustment before your Income Tax position is finalised. You can see what each plan includes on our pricing page.

Conclusion

The 55p mileage allowance is easy to calculate for the year and easy to get wrong month by month. Keep a running total, forecast the crossing, split that one month cleanly and treat every flat-rate car as sharing the same band. Then your quarterly updates and your Self Assessment return, due online by 31 January after the tax year ends, will tell the same story. If you would like us to set up or check your mileage records, contact our team.

Last reviewed 6 November 2026 by the UK Driver Accountants tax team

This article is general information and not personal tax advice. Rates and rules can change, so check GOV.UK for the current position and speak to a qualified accountant about your own circumstances. If HMRC has opened an enquiry or raised a penalty, we recommend professional representation.