Blog #11 How to calculate mileage costs, as a sole trader of any kind in the Republic of Ireland

How do you calculate mileage allowances as a sole trader running a business in Ireland? Is it even worth it? In this post, I’m going to give a real world example and share some napkin math with you so that you can get an insight into the running of a business. To calculate mileage, you can use a reasonable rate of between 20 to 40 cent per kilometre driven, I use 30 cent.

You are allowed to use reasonable rates. Don’t bother figuring out how much petrol/diesel your car uses per kilometre, it’s antiquated. This is much simpler. So, now that we have the rates let’s get down to our napkin math!

How to run a business: Lesson time

Recently, I did a project with the Arts council of Offaly called Mini-movies. This project involved me driving round to 3 schools around Offaly and making a mini-movie with the kids. Naturally, as a business, I am allowed to deduct the costs of this business travel in my annual returns.

2 of the schools involved in the mini-movies project were outside my typical area of work and thus qualify for mileage allowances, while the other school, Geashill, doesn’t qualify (it’s inside my typical area of work and therefore I can’t deduct travel as an expense).

The schools outside of my area of work were in Kilcormac and Blueball.

Kilcormac is 29.1 km away from my residence.

We multiply the distance 29.1 km by €0.30 (the allowance) to get €8.73, then multiply that by 2 to get 17.46€ per round trip.

I went for 2 days so we multiply that by 2 again to get €34.92 for Kilcormac. Not bad.

It’s the same process again for Blueball, which is 17.1 km away.

17.1 by 0.30= €5.13 by 2 again = €10.26 per round trip. €20.52 total for the two days.

In total, for 4 days travel, we are allowed deduct €55.44 as travel expenses. I’m going to be doing my own accounts for the first year of business so I’ll be doing this exercise throughout the year, as well as tracking equipment costs and other expenses in an Excel file. This is something I can do in cotton pants, sitting in a cosy room while I hear the clock tick and watch the cats take a nap. However easy it is, it’s still essential to running a business and I would prefer to spend time doing expenses myself rather than hand off everything to an accountant and getting a large bill at the end of the year instead. Yikes.

My year one expenses also include things like a printer, video light with softbox and website domain and hosting fees. Not to mention insurance.

All of these are relatively affordable and are turning out to cost less than I projected in my business plan. The scary costs of business is in the form of employees and a premises. With these expenses come new insurances, taxes, regulations and costs needed to expand, all while having to justify a price hike to your customers. I’m going to stick to being a sole trader for now.

That’s it. Just a quick insight into the practical side of running a business. I wish this was there for me when I was figuring out how to run a business. To answer my question from the beginning, is it worth it? The answer is undoubtedly yes. I am able to claim over €50 from just a few days work, one more way I can deduct relevant and clearly justified business expenses in my returns. I recommed you do the same.

Thanks for reading and if you’ve any comments, let me know down below.

Good luck out there.

-D.C.