Vehicle insurance

Conditions

• If you claim your actual vehicle running costs, the business proportion of the insurance is allowable, restricted to reflect any private use.
• If you use HMRC's approved mileage rate instead, insurance is already built into that rate and cannot be claimed separately. You generally have to keep using one method for the life of the vehicle.
• Where a company owns or leases a car, the company pays and deducts the insurance, but providing the car for private use (including commuting) creates a benefit in kind. If instead a director or employee uses their own car and is paid mileage, only the mileage is claimed — not the insurance.

Common mistakes

• Claiming insurance separately while also using the mileage method.
• Claiming the full premium on a vehicle with significant private use.
• Treating the insurance on a company car as a separate personal claim — the company covers it, and private use is a benefit in kind.

What to keep

• Insurance schedule and a basis for the business proportion.

Real-world example

A sole trader who claims actual running costs for their van includes the business proportion of the van insurance. A different trader using the mileage method does not claim it separately.

Frequently asked

Related allowances