Vehicle Cost per Mile Calculator (UK 2026/27 Mileage Rates)

For trades and service businesses, vehicles are often the second-biggest cost after wages. Most owners know what they spend on fuel. Fewer know what each mile costs once insurance, tax, servicing, tyres and depreciation are added. That figure matters when you price travel, decide how far to travel for a job or compare vehicles.

Fixed costs per mile fall as mileage rises; fuel per mile does not.

The two kinds of cost

Running costs rise with every mile: fuel, and to some extent tyres and servicing.
Standing costs are paid whatever the mileage: insurance, vehicle tax, lease or depreciation, breakdown cover.

Fuel cost per mile = fuel price per litre × 4.54609 ÷ miles per gallon, because there are 4.54609 litres in a UK gallon.

Worked example

A van covers 12,000 business miles a year at 45 miles per gallon, with diesel at 140p a litre. Yearly standing costs are insurance £900, tax £195, servicing and tyres £700 and depreciation £3,000.

Fuel per mile: £1.40 × 4.54609 ÷ 45 = £0.141.
Other costs per mile: (£900 + £195 + £700 + £3,000) ÷ 12,000 = £0.400.
Total: £0.54 a mile, or about £6,500 a year.

At 20 miles a day, that is £10.80 a day in vehicle costs before any driver time. A job 15 miles away costs about £16 in vehicle costs for the round trip.

HMRC approved mileage rates

When employees use their own car for business, HMRC sets the amount you can pay them without tax. For the 2026 to 2027 tax year the rate for cars is 55p a mile for the first 10,000 business miles and 25p a mile after that. For National Insurance purposes, 55p applies to all business miles. Motorcycles are 24p and bicycles 20p.

These rates are a useful benchmark, but they are set for the average car, not your van.

Calculate your cost per mile