Mileage tracking for UK startups: HMRC compliance, rates, records and automation

Understanding Business Mileage: What UK Startups Can Claim

For an early-stage UK founder, business travel is a sign of progress. It could be a SaaS founder visiting a first potential enterprise client in London, a biotech lead meeting with an investor, or a professional services team travelling for an on-site project kick-off. While these trips are essential for growth, the administrative burden that follows is not. Reclaiming business mileage is a crucial way to manage cash flow, but getting it wrong exposes your startup to compliance risks and missed tax deductions. Understanding how to track business mileage for HMRC compliance is not just an accounting task; it is a fundamental part of disciplined financial management. Getting this right establishes a scalable process that protects your runway and ensures you are not leaving money on the table. For related policies and controls, see our hub on expense management.

Before you can track mileage, you need to understand what counts as a business journey in the eyes of HMRC. The core concept is travel to a 'temporary workplace'. A journey from your home to your permanent office is considered 'ordinary commuting' and is not eligible for mileage claims. However, a trip from your office to a client site, a conference, or a supplier meeting absolutely is. If you primarily work from home, a trip to a client's office is typically considered a business journey, as your home is your permanent workplace.

HMRC uses the Approved Mileage Allowance Payments (AMAP) scheme for this process. AMAP is a simplified, tax-free method for reimbursing employees who use their personal vehicles for business travel. For a startup with limited finance resources, the key advantage is that the flat-rate payment covers all vehicle running costs, including fuel, insurance, and general wear-and-tear. This means you do not need to collect and process endless fuel receipts or calculate complex depreciation. It is a straightforward system designed for efficiency, making it an ideal approach for claiming travel expenses without administrative overhead.

HMRC Mileage Rules: Rates, Records and How to Track for Compliance

HMRC's rules are specific, and adhering to them is non-negotiable for compliant startup mileage reimbursement. Misapplying the rates is a common error that leads to incorrect expense claims and potential compliance issues. The official AMAP rates are tiered and vary by vehicle type. Adhering to these rates is central to keeping your mileage log accurate.

According to HMRC, the current rates for claiming travel expenses are:

Fact: Approved Mileage Allowance Payments (AMAP) Rates (2023/24) for cars and vans are 45p per mile for the first 10,000 business miles in a tax year.

Fact: The AMAP rate for cars and vans drops to 25p per mile after 10,000 business miles.

Fact: The AMAP rate for motorcycles is 24p per mile.

Fact: The AMAP rate for bicycles is 20p per mile.

A critical distinction many founders miss is that, as HMRC states, Fact: "The 10,000-mile threshold for AMAP rates is calculated per employee, not per company." If your head of sales drives 12,000 miles and your CTO drives 5,000, only the sales lead’s rate will drop to 25p after they cross the threshold. Additionally, you can claim an extra allowance for carpooling. Fact: An additional 5p per mile, per passenger, can be paid for fellow employees on the same business journey.

Equally important is the data you record in your mileage log. Fact: HMRC requires mileage logs to include: date of journey, purpose of trip, start and end locations, and total miles driven. Consider this example of a correct log entry for a Deeptech founder visiting a potential manufacturing partner:

• Date: 16 November 2023
• Purpose: Facility tour and initial partnership discussion with Advanced Polymers Ltd.
• Start Location: Office, Unit 5, Cambridge Science Park, CB4 0GF
• End Location: Advanced Polymers Ltd., 14 Industrial Estate, Coventry, CV1 2TT
• Total Miles Driven: 194 (return journey)

Finally, remember that these records have a long shelf life. Fact: Mileage records must be kept for 6 years from the end of the last company financial year they relate to. This long retention period makes organised, digital record-keeping essential from day one.

From Manual Spreadsheets to Automated Mileage Log Apps

The most common starting point for early-stage companies looking to track business travel in the UK is a spreadsheet. For a solo founder making two trips a month, this is a workable solution. However, as the team grows, the manual spreadsheet quickly becomes an administrative bottleneck and a source of errors. The pattern across fast-growing businesses is consistent: manual tracking leads to forgotten journeys, inaccurate mileage estimates, and wasted time chasing employees for their logs at the end of the month. Incomplete logs mean missed tax deductions and can attract HMRC scrutiny.

This is the trigger point to move to an automated system. Dedicated mileage log apps like MileIQ use GPS to automatically record trips, which the user can then classify as business or personal with a simple swipe. This solves the core problems of forgotten trips and inaccurate distance calculations. The real strategic advantage, however, lies in integration. Choosing a tool that connects directly to your finance stack, such as a Xero integration like Tripcatcher or a feature within a spend management platform like Pleo, transforms the entire workflow. A logged journey can be automatically submitted for approval and synced to Xero, creating a bill ready for payment. This removes manual data entry, reduces the risk of error, and gives you a real-time view of travel expenses. The reality for most UK startups is pragmatic: start with a shared spreadsheet, but plan to adopt an automated tool once you have more than two people regularly travelling for business.

A Scalable Framework for Startup Mileage Reimbursement

Your approach to tracking business mileage should evolve with your company's stage. A one-size-fits-all solution does not exist. The goal is to build a compliant system that scales as you grow, making HMRC mileage rules an embedded part of your finance operations. Here are actionable steps based on your current size and complexity.

For Founders and Teams of 2 to 5

Your priority is consistency, not complex software. Start by creating a standardised Google Sheet template that includes all the fields HMRC requires: date, purpose, start and end locations, and miles. Share this with the team and set a recurring monthly calendar reminder to ensure everyone updates it. At this stage, discipline is key, and a well-managed spreadsheet is perfectly adequate for compliance.

For Teams of 5 to 20 with Regular Travel

The spreadsheet is now a liability. The time spent managing it, combined with the risk of inaccurate data, means it is time to invest in an automated solution. Evaluate one or two dedicated mileage log apps, prioritising those that integrate directly with your accounting software like Xero. The small monthly subscription cost is easily offset by the time savings and improved accuracy. Support this with a simple, one-page expense policy that clearly states the current AMAP rates and how to use the new tool.

For Teams Scaling Past 20 (Series A and Beyond)

At this scale, mileage tracking should not be a standalone process. It needs to be integrated into a comprehensive spend management platform. Your process should be fully automated, from journey tracking to reimbursement, often facilitated by corporate cards. Your finance lead should be reviewing and analysing spending patterns, not manually keying in data from multiple sources. A scenario we repeatedly see is companies at this stage needing to regularly check the 10,000-mile threshold for high-mileage employees, ensuring the reimbursement rate is adjusted correctly mid-year. This should be managed within your system, supported by clear approval workflows.

For founders building repeatable finance processes, the small upfront investment in the right toolset pays dividends in time saved and reduced audit risk. Build a compliant system that scales, and make mileage tracking an integrated part of your spending controls. For related templates and policy guidance, visit the expense management hub.

Frequently Asked Questions

Q: Do I need fuel receipts if I use the AMAP system for business mileage?

A: No. A key benefit of the AMAP scheme is its simplicity. The per-mile rate is designed to cover fuel, insurance, and wear-and-tear, so you do not need to collect or submit fuel receipts. You only need a detailed mileage log that meets HMRC requirements for each journey.

Q: Can I claim mileage expenses for travel from home to the office?

A: Generally, no. This is considered 'ordinary commuting' and is not eligible. An exception may apply if your home is your primary workplace and you are travelling to a temporary workplace, such as a client's office. It is always best to confirm the specifics of your situation.

Q: What happens if a startup pays more than the approved AMAP rates?

A: If your company reimburses employees at a rate higher than the official AMAP rates, the excess amount is considered a benefit. This means it must be reported to HMRC, and it will be subject to tax and National Insurance contributions, creating an additional administrative burden.

Q: Can I claim mileage if I use a company car?

A: The AMAP scheme is for employees using their personal vehicles. If you use a company car, you cannot claim AMAP rates. Instead, you can typically claim tax relief on the fuel used for business journeys, which requires detailed records of business and private mileage and actual fuel costs.