Renting a PCO car: mileage rate or actual costs?
If you rent your private hire car by the week, you cannot claim both the rental and the mileage rate. Which one to claim depends on the rent, your miles and how much of the week the car works. Here is the arithmetic.
Correct for the 2026/27 tax year. Last checked 29/09/2026.
Most drivers are better off on the mileage rate, 55p a mile for the first 10,000 business miles in a tax year and 25p after. Renting changes that, because a weekly rental can cost more than the mileage rate gives you back. The only way to know is to do the sum.
The two methods
Mileage rate. Business miles times the rate. It covers the rental, insurance, fuel or charging, servicing and everything else to do with the car. Nothing else about the car can be added.
Actual costs. The rental, fuel or charging, and any other car costs you pay, reduced for personal use. If the rental includes insurance and servicing, as Addison Lee's does, there is little else to add.
The arithmetic
Illustrative figures for a full-time driver renting an electric car, charging at about 5p a mile and using it only for work. The rents are examples.
| Business miles a year | Mileage claim | Actual at £150 a week | Actual at £250 a week |
|---|---|---|---|
| 20,000 | £8,000 | £8,800 | £14,000 |
| 30,000 | £10,500 | £9,300 | £14,500 |
| 40,000 | £13,000 | £9,800 | £15,000 |
The pattern: with a modest rent and high mileage the mileage rate wins; with a high rent, or lower mileage, actual costs win, because every mile after 10,000 adds only 25p to the mileage claim.
Things that shift it
- Personal use. Drive the rental car to the shops and that share of the rental is not claimable. The mileage rate only counts business miles anyway, so personal use costs it nothing.
- Weeks off. The rent runs whether you drive or not, and those weeks still count as a cost of the business under actual costs.
- Petrol or hybrid rather than electric. Fuel at three or four times the cost per mile makes actual costs more attractive.
- Free weeks. An introductory offer with free rental weeks lowers the actual-costs figure for that year.
The choice sticks
HMRC treats the method as a choice per vehicle, and once you use the mileage rate on a vehicle you keep it for as long as you use that vehicle. A new rental car is a new vehicle, so the decision comes round again. Keep the rental agreement and statements whichever you choose; under actual costs they are your evidence. Can I switch from mileage to actual costs? has the rule.
Sources
Common questions
- Can I claim my PCO car rental as an expense?
- Yes, if you claim actual vehicle costs. The rental, fuel or charging and other running costs then come off your profit, less any personal use. If you claim the mileage rate instead, the rental is already covered by it.
- Can I claim the mileage rate and the car rental?
- No. The mileage rate is designed to cover every cost of having and running a vehicle, including hiring it. Claiming both would claim the same cost twice.
About the author
Issac Davies, Founder of JoltMile
Issac Davies drives for gig apps in the UK and built JoltMile to show drivers what a shift actually pays once fuel, insurance and tax come off. Every guide here is checked against HMRC and gov.uk guidance, and is information rather than tax advice.
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Expenses · Mileage tracking · Estimated tax: the JoltMile app works this out from your own shifts. Your first 10 shifts are free.
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