Car Running Cost Per Mile: Common Mistakes, Tips and FAQs

Introduction

UK drivers juggle imperial gallons, pence per litre and pence per kWh. Converting everything to the same basis is the key to fair comparisons.

This article covers the most common mistakes people make with car Running Cost Per Mile, what really moves the result, and answers to the questions we hear most often.

Why it matters

Accurate motoring numbers help you budget journeys, claim mileage relief from HMRC and decide whether an electric car makes financial sense for you.

How it's calculated

Add up every yearly cost of owning the car, then divide by the miles you drive.

What changes the result most

We raised each input by 10% on its own, starting from a typical example where cost per mile is 50.6p. Here's what happened:

• Raising miles per year from 8,000 to 8,800 changes cost per mile to 46.0p (-9.1%).
• Raising depreciation from £1,500 to £1,650 changes cost per mile to 52.4p (+3.7%).
• Raising fuel per year from £1,200 to £1,320 changes cost per mile to 52.1p (+3.0%).
• Raising insurance from £600 to £660 changes cost per mile to 51.3p (+1.5%).
• Raising servicing, MOT and repairs from £350 to £385 changes cost per mile to 51.0p (+0.9%).
• Raising parking and other from £200 to £220 changes cost per mile to 50.8p (+0.5%).

Focus first on miles per year, which has the biggest effect in this example.

Common mistakes to avoid

1. Using US MPG figures for UK calculations.
2. Ignoring depreciation and insurance in cost-per-mile estimates.
3. Forgetting to claim mileage allowance relief when your employer pays below HMRC rates.
4. Comparing EVs using public charging prices when you'll mostly charge at home.

A quick example

With the inputs below, cost per mile comes out at 50.6p.

Tips

• UK MPG uses imperial gallons (4.546 litres), which differ from US gallons.
• HMRC's approved mileage rate is 45p per mile for the first 10,000 business miles.
• Home EV charging on an off-peak tariff is usually far cheaper than public rapid chargers.
• Depreciation is often the largest hidden cost of owning a newer car.

Frequently asked questions

What's the quickest way to work out car Running Cost Per Mile?

Use our free car Cost Per Mile Calculator. It applies this method automatically: Add up every yearly cost of owning the car, then divide by the miles you drive.

What MPG should I use?

Use your real-world figure from your car's trip computer if you can; official figures are often optimistic.

Can I claim for commuting miles?

No. Normal commuting to a permanent workplace doesn't count as business mileage.

How often do HMRC mileage rates change?

Rarely. The 45p rate has been unchanged for many years, but always check GOV.UK.

Related calculators

• Fuel Cost Calculator
• MPG Converter
• Journey Time Calculator
• EV Charging Cost Calculator
• EV vs Petrol Cost Calculator
• Car Depreciation Calculator

For the full method, read How to Calculate Car Running Cost Per Mile in the UK: Step-by-Step Guide.