Can Taxi Drivers Claim Fuel?
Fuel is typically the largest single expense for taxi drivers. Understanding the rules around claiming fuel costs can save you hundreds each year.
Yes - fuel is an allowable business expense for UK taxi and private hire drivers.
What You Can Claim
- Petrol, diesel, or LPG purchased for business journeys
- Electric vehicle charging costs for business use
- AdBlue and other fuel additives
- Fuel purchased at motorway services during long-distance fares
- Business proportion of fuel if vehicle is mixed-use
What You Cannot Claim
- Fuel for personal journeys (school runs, shopping, holidays)
- Fuel if you are already claiming the HMRC mileage allowance (45p/25p per mile)
- Fuel for a vehicle not used in your taxi business
- Red diesel or fuel used illegally on public roads
Typical Annual Range
£3,000 - £8,000 per year
Average annual spend by UK taxi drivers on fuel. Your actual costs may vary depending on location, hours worked, and vehicle type.
HMRC Rules
HMRC allows two methods for claiming vehicle costs: the simplified mileage allowance (45p per mile for the first 10,000 miles, 25p thereafter) or actual costs. If you choose actual costs, you can claim the business proportion of all fuel receipts. You cannot mix the two methods for the same vehicle in the same tax year. Once you use actual costs for a vehicle, you must continue with actual costs for that vehicle in future years.
Maximise Your Fuel Deductions
Keep every fuel receipt - HMRC can request evidence going back 6 years
If your vehicle is used 80% for business, you can claim 80% of fuel costs under the actual cost method
Supermarket fuel is usually cheaper - the savings add up over a year
Consider a fuel card for easier record-keeping and VAT reclaim if registered
Track your mileage carefully to determine the best method for you - mileage allowance is often better for lower-mileage drivers
Frequently Asked Questions
Common questions about claiming fuel on your tax return
Should I use mileage allowance or actual fuel costs?
It depends on your situation. The mileage allowance (45p/mile for first 10,000 miles, 25p/mile after) is simpler and often better for drivers doing fewer miles. Actual costs can save more for high-mileage drivers with fuel-efficient vehicles. Use Fyled's tax calculator to compare both methods.
Can I claim fuel for driving to my first fare of the day?
If you work from a taxi rank or office, the journey from home to that location is commuting and not deductible. However, if your first fare is a pick-up from a location and you drive directly there from home, that journey is business mileage.
Do I need to keep paper fuel receipts?
HMRC accepts digital copies of receipts. You can photograph them and store them digitally. Fyled's receipt scanner makes this easy - just snap a photo and it is automatically categorised.
Can I claim fuel for an electric vehicle?
Yes. Electricity used to charge your EV for business purposes is a deductible expense under actual costs, or you can use the same 45p/25p mileage allowance rates which apply to all vehicles regardless of fuel type.
Track Your Fuel Expenses Automatically
Fyled makes it easy to record, categorise, and claim all your taxi expenses. See exactly how much tax you will save.