📋 Assumptions Used in These Examples
All examples use the HMRC 2025/26 rates: Personal Allowance £12,570; Income Tax 20% (basic rate); Class 4 NI 6% (lower band). Mileage relief uses AMAP at 45p/mile (first 10,000) + 25p/mile (remainder). No other expenses assumed unless stated.
Example 1: Part-Time Driver — £15,000 Annual Gross
A part-time delivery driver earning £15,000 per year, driving 8,000 business miles:
| Item | Amount |
|---|---|
| Gross annual income | £15,000 |
| Mileage relief (8,000 × £0.45) | −£3,600 |
| Net taxable profit | £11,400 |
| Less Personal Allowance | £12,570 |
| Taxable income | £0 |
| Income Tax | £0 |
| Class 4 NI | £0 |
| Annual take-home pay | £11,400 |
| Monthly take-home pay | £950 |
Because mileage relief brings the net profit below the £12,570 personal allowance, this driver pays zero income tax and zero NI. The gross-to-net retention rate is 100% of after-expenses income.
Example 2: Full-Time Driver — £25,000 Annual Gross
A full-time Uber or delivery driver earning £25,000, driving 15,000 business miles:
| Item | Amount |
|---|---|
| Gross annual income | £25,000 |
| Mileage relief (10,000 × £0.45 + 5,000 × £0.25) | −£5,750 |
| Net taxable profit | £19,250 |
| Less Personal Allowance | −£12,570 |
| Taxable income | £6,680 |
| Income Tax (20%) | −£1,336 |
| Class 4 NI (6% on £6,680) | −£400.80 |
| Annual take-home pay | £17,513.20 |
| Monthly take-home pay | £1,459.43 |
On £25,000 gross, effective total tax (income tax + NI) is just £1,736.80 — an effective overall rate of under 7% of gross income, thanks to mileage relief and the personal allowance.
Example 3: High-Mileage Driver — £35,000 Annual Gross
A taxi driver earning £35,000, driving 22,000 business miles:
| Item | Amount |
|---|---|
| Gross annual income | £35,000 |
| Mileage relief (10,000 × £0.45 + 12,000 × £0.25) | −£7,500 |
| Net taxable profit | £27,500 |
| Less Personal Allowance | −£12,570 |
| Taxable income | £14,930 |
| Income Tax (20%) | −£2,986 |
| Class 4 NI (6% on £14,930) | −£895.80 |
| Annual take-home pay | £23,618.20 |
| Monthly take-home pay | £1,968.18 |
Example 4: High Earner — £50,000 Annual Gross
A successful PHV driver or owner-operator earning £50,000, driving 28,000 business miles:
| Item | Amount |
|---|---|
| Gross annual income | £50,000 |
| Mileage relief (10,000 × £0.45 + 18,000 × £0.25) | −£9,000 |
| Net taxable profit | £41,000 |
| Less Personal Allowance | −£12,570 |
| Taxable income | £28,430 |
| Income Tax (20%) | −£5,686 |
| Class 4 NI (6% on £28,430) | −£1,705.80 |
| Annual take-home pay | £33,608.20 |
| Monthly take-home pay | £2,800.68 |
On £50,000 gross, the effective overall tax rate is approximately 14.8% of gross income — well below the 20% basic rate — entirely because of the £9,000 mileage relief deduction.
The Power of Mileage Relief
Across all four examples, mileage relief is the single most important factor in reducing tax. A driver earning £35,000 with 22,000 miles saves approximately £2,440 in combined tax and NI compared to claiming no mileage relief at all. Over a decade, that's £24,000+ in saved tax.
This is why keeping an accurate mileage log every working day is one of the highest-return activities a self-employed driver can do.
Calculate Your Exact Numbers
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Open Free Tax Calculator →Frequently Asked Questions
Why does mileage relief reduce my Class 4 NI as well as Income Tax?
Both Income Tax and Class 4 NI are calculated on your net taxable profit (income minus expenses). Mileage relief reduces your profit directly, which lowers both your tax and your NI bill simultaneously.
These examples don't include my accountant's fees or licensing costs. How do I add those?
Use our calculator's "Other Allowable Expenses" field to enter your total annual expenses other than mileage (accountancy, licensing, phone, etc.). The calculator will deduct these from your gross income before calculating tax.
I earn above £50,270. How does my tax change?
Above £50,270, income is taxed at 40% (higher rate) and Class 4 NI drops to 2%. Our calculator handles both bands automatically if you enter earnings above this threshold.