Mileage Allowance vs Actual Expenses: Which is Better for Delivery Drivers? (2025 Edition)

Mileage Allowance vs Actual Expenses: Calculated

One of the most common questions we get is: "Which expense method saves me more money?"

The answer depends entirely on your vehicle type and annual mileage. Let's break down the math for 2025.

The Rules

• Simplified Mileage: Claim flat rates (45p/mile for cars/vans first 10k, 24p for motorbikes). Covers everything (fuel, insurance, repairs, depreciation).
• Actual Costs: Claim exact receipts for fuel, insurance, repairs, MOT, etc. Business use % only!

Warning: You can't swap methods for the same vehicle year-to-year. Once you pick one, you stick with it until you change vehicles.

Scenario A: The Moped Courier

Rides a Honda PCX125. Does 12,000 miles/year.

• Mileage Method: 12,000 miles * 24p = £2,880 deduction.
• Actual Costs:
  • Fuel: £1,200
  • Insurance (Zego/H&R): £1,500
  • Service/Tyres: £400
  • Total: £3,100 (Business use 100%)

Winner: Actual Costs. High insurance costs for scooters often mean tracking actual expenses is better than the low 24p mileage rate.

Scenario B: The Car Driver (Part-Time)

Drives a 2015 Ford Fiesta. Does 4,000 miles/year.

• Mileage Method: 4,000 * 45p = £1,800 deduction.
• Actual Costs:
  • Fuel: £600
  • Insurance (Top-up): £500
  • Repairs: £200
  • Total: £1,300

Winner: Mileage Allowance. The generous 45p rate usually beats actual costs for cars unless you have huge repair bills.

Scenario C: The E-Bike Rider

Rides a Zoomo e-bike.

• Mileage Method: Bicycle rate is only 20p/mile.
• Actual Costs: You can claim the legitimate business cost of renting/leasing the bike, plus repairs and batteries.

Winner: Actual Costs (usually). If you rent your e-bike for £50/week, that's £2,600/year. You'd need to cycle 13,000 miles to match that with the mileage rate!

Conclusion

Use GigCalc to estimate both. Log your mileage and keep your receipts for a month, then see which total is higher.