MilometryDepreciation: the biggest cost of your car, and the one nobody counts
Fuel is the cost you feel because you pay it at a pump. For most drivers it is not the largest one. The largest is the car quietly losing its value.
一般的な情報であり、助言ではありません。 2026年9月27日時点の一般的な情報として作成しています。内容は変わることがあるため、判断の前に公式情報を確認するか専門家にご相談ください。法律・税務・金融上の助言ではありません。
Ask someone what their car costs and they will tell you what they spend on fuel. It is the visible cost, because you hand money over for it in small, memorable amounts.
For most drivers it is not the biggest one.
The shape of the real bill
Across a typical year, the costs stack up roughly like this:
- Depreciation: usually the largest single item on a car under about eight years old
- Fuel: the one you notice
- Insurance
- Servicing, tyres, MOT and repairs
- Road tax
A three-year-old car losing £1,200 a year in value, while burning £1,400 of fuel, is not unusual. On a newer or more expensive car, depreciation can dwarf everything else. A £30,000 car shedding 40% in three years is losing about £4,000 a year, roughly £77 a week, while you sleep.
Where the money actually goes
A typical three-year-old family car, 10,000 miles a year:
| Cost | Per year | Per mile | Share |
|---|---|---|---|
| Depreciation | £1,200 | 12.0p | 34% |
| Fuel | £1,460 | 14.6p | 41% |
| Insurance | £480 | 4.8p | 13% |
| Servicing, tyres, MOT | £350 | 3.5p | 10% |
| Road tax | £70 | 0.7p | 2% |
| Total | £3,560 | 35.6p |
At 55p a mile for the first 10,000 business miles (the approved rate for cars and vans from 6 April 2026), the approved rate is comfortably ahead of that. On a newer or more expensive car it often is not:
| Car | Annual depreciation | Total cost per mile at 10,000 mi |
|---|---|---|
| 8-year-old hatchback, bought for £4,000 | £400 | ~26p |
| 3-year-old family car | £1,200 | ~36p |
| New £30,000 car, 40% over three years | £4,000 | ~64p |
The new car loses more in depreciation alone than the older one costs to run entirely.
Why this matters for a mileage claim
It explains the size of the approved rate.
HMRC's approved mileage rate is not a fuel reimbursement. It is meant to cover the whole cost of running your own car for business: fuel, insurance, servicing, tyres, road tax and depreciation. That is why it is so much higher than the Advisory Fuel Rates used for company cars, where the company already owns the asset and is absorbing the depreciation itself.
People who think of 55p as "generous because petrol is only about 15p a mile" are comparing it against one line of a five-line bill.
The mileage connection
Depreciation is partly time and partly miles. Two identical cars, one at 6,000 miles a year and one at 20,000, will not be worth the same in three years.
Which means high-mileage drivers are absorbing a larger cost than the fuel gauge suggests, and it is exactly those drivers for whom recording business mileage properly is worth the most, because the claim is what offsets it.
Knowing your own number
The honest cost per mile is total annual costs divided by annual miles, not pence per litre.
Milometry gets you part of the way automatically: it works out your real fuel cost per mile from your own fill-ups rather than a brochure figure. The rest, insurance, servicing, the value the car quietly lost, is worth adding up once a year, if only to know whether the approved rate is generous for your car or barely covering it.
For a modest car it is often generous. For someone running a newer, more expensive or thirsty vehicle hard, it may not be. Employees cannot swap the approved rate for actual costs. Self-employed drivers can choose between simplified expenses and actual costs, and that is the case where comparing the two deserves a look.
Sources
- Travel, mileage and fuel rates and allowances (HMRC)
- Advisory fuel rates (HMRC)
- Expenses if you're self-employed: car, van and travel expenses (HMRC)
- Simplified expenses: vehicles (HMRC)
- Increasing mileage rates (HMRC policy paper)
- Vehicle tax rate tables (DVLA)
General information, not tax advice. Cost figures are illustrative estimates.
