The trading allowance against claiming expenses
You can deduct the £1,000 trading allowance from your turnover, or you can deduct your real expenses. Not both. For anyone driving more than a few hours a week the expenses win easily, because the mileage claim alone passes £1,000 inside about two thousand business miles.
Correct for the 2026/27 tax year. Last checked 12/09/2026.
The trading allowance is a simplification for people with small side incomes. It lets you knock £1,000 off your turnover and claim nothing else. For most gig drivers it is the wrong choice, and the arithmetic shows why quickly.
The comparison
Three drivers, all claiming the mileage rate on the expenses side.
| Occasional | Part-time | Full-time | |
|---|---|---|---|
| Turnover | £1,600.00 | £9,400.00 | £26,000.00 |
| Business miles | 900 | 6,200 | 16,000 |
| Mileage claim | £495.00 | £3,410.00 | £7,000.00 |
| Other allowable costs | £40.00 | £310.00 | £1,900.00 |
| Profit claiming expenses | £1,065.00 | £5,680.00 | £17,100.00 |
| Profit taking the allowance | £600.00 | £8,400.00 | £25,000.00 |
| Better option | Allowance | Expenses | Expenses |
The full-time driver is £7,900 of taxable profit better off claiming expenses. Even the part-time driver is £2,720 better off. Only the occasional driver, doing under a thousand miles a year, is ahead on the allowance.
Where the crossover is
The allowance is worth £1,000. At 55p a mile, £1,000 of mileage claim is about 1,820 business miles. Drive more than that in a tax year and expenses are the better option, before any other cost is counted.
The one thing the allowance does buy
Simplicity. Take the allowance and there is nothing to evidence: no mileage log, no receipts, no apportionment. For a genuinely tiny income that is worth something, and the tax saved by claiming expenses on 900 miles is not worth a year of record keeping.
Above that, the record keeping is required anyway, because you need it for the income side regardless.
Registering either way
The £1,000 test is on turnover. Cross it and you register and file, whichever way you then calculate the profit. Registering as a sole trader covers that.
Sources
Common questions
- Can I claim the trading allowance and my mileage?
- No. It is one or the other. Take the £1,000 trading allowance and you deduct nothing else; claim mileage and other expenses and the allowance is not available. For most full-time drivers the mileage is worth far more.
- When is the trading allowance the better choice?
- When your real expenses are under £1,000 for the year, which for a driver means very little driving indeed. Occasional weekend work on a bicycle is the realistic case.
- Do I still have to register if I take the allowance?
- You have to register once turnover passes £1,000. Below that, and with no other reason to file, generally not.
- Is the allowance measured on profit or turnover?
- Turnover, before any costs. A driver who took £1,400 and spent £600 on fuel has passed it even though they only made £800.
- Can I choose a different option each year?
- Yes. The choice is made each tax year and nothing binds you to last year's decision.
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.
Track this automatically
Estimated tax: the JoltMile app works this out from your own shifts. Your first 10 shifts are free.
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