Uber driver expenses & mileage deduction: how to calculate your real cost per mile
Mileage deduction, fuel, wear, insurance: what Uber drivers can claim plus how to calculate your real cost per mile (US, UK, Canada).
Most ride-hailing and delivery drivers know their earnings to the penny. But their actual cost per mile? Hardly anyone works it out seriously. Yet that's the number that determines whether a trip is profitable — or whether you're essentially driving for free.
Why the fare Uber shows you is meaningless
When Uber offers you a £12 trip for 8 miles, it looks reasonable. But that figure ignores the dead miles to reach the passenger, plus what the trip actually costs you in fuel, vehicle wear, and insurance. Once you deduct everything, some supposedly 'decent' trips leave you with well under £8 in real profit.
The three components of your cost per mile
Your real cost per mile breaks down into three distinct areas. Each one matters, and ignoring any of them distorts the whole picture.
1. Fuel
This is the most visible cost, so it's often the only one drivers track. Use your actual real-world consumption — not the manufacturer's figure — based on urban driving with frequent stops. Multiply by the current fuel price and divide accordingly.
Example: you use 35 mpg in real conditions, petrol at £1.55/litre. Cost per mile ≈ £0.12–0.14 depending on your exact consumption.
2. Vehicle wear
This is consistently underestimated. It covers tyres (a full set every 25,000–40,000 miles in intensive use), brakes, clutch, oil changes, belts, and general repairs. In intensive ride-hailing or delivery use, budget between £0.05 and £0.10 per mile depending on your vehicle.
- →Small petrol car (Fiesta, Polo...): approx £0.05–0.07/mile wear
- →Mid-size diesel (Focus, Golf...): approx £0.06–0.09/mile
- →SUV or MPV: approx £0.08–0.12/mile
- →Electric vehicle: approx £0.03–0.05/mile (lower mechanical wear)
3. Professional insurance
Standard car insurance doesn't cover ride-hailing or delivery work. Professional hire and reward insurance typically costs between £150 and £300 per month depending on the vehicle and annual mileage. Spread across your monthly miles, that's roughly £0.04–0.08 per mile for a driver covering around 2,000 miles a month.
The full calculation: your real cost per mile
Add up all three components. A driver in a mid-size car doing around 2,000 miles per month will typically land between £0.20 and £0.28 per mile total. That doesn't yet include vehicle finance or lease payments — if you're on a PCP or lease, add another £0.10–0.20 per mile on top.
Estimated total cost (excluding finance): fuel + wear + insurance = between £0.20 and £0.28/mile. With finance: between £0.30 and £0.48/mile.
Why dead miles must be included
Your cost per mile applies to every mile you drive — including the ones to reach the passenger. If you travel 3 miles empty to pick up someone for a 9-mile trip, you've actually incurred costs over 12 miles while only being paid for 9. Many drivers calculate profitability on trip miles only — that's a mistake that can cause a 20–40% gap between perceived and actual earnings.
How to use this number day-to-day
Once you know your cost per mile, you can assess any trip before accepting it. If a trip pays £1.20/mile gross and your cost is £0.25/mile, your net margin is £0.95/mile — solid. If another trip pays £0.70/mile gross, you're likely below your breakeven point once the platform commission is applied.
This is exactly what Drivee calculates automatically in under a second before you accept a trip — using your actual cost profile and factoring in dead miles.
Mileage deduction: what Uber drivers can actually claim
The miles you drive for work aren't just a cost — they're also a tax deduction. The rules differ sharply between markets, and most Uber drivers either don't claim what they're entitled to, or they claim it wrong. Knowing exactly what you can deduct as an Uber driver expense is often worth more per year than any platform optimisation.
United States — IRS standard mileage rate
US rideshare drivers can deduct business miles using the IRS standard mileage rate (roughly $0.67–$0.70 per mile depending on the tax year — check the current IRS rate for 2026). This rate already bundles fuel, depreciation, maintenance and insurance, so you cannot also claim those costs separately when using the standard mileage method. Alternative: the actual expenses method, where you deduct real fuel/maintenance/insurance pro-rated by business-use percentage. Most Uber drivers come out ahead with the standard mileage rate unless they drive an expensive or fuel-hungry vehicle. All miles count: passenger trips, dead miles between pickups, and miles driven while logged in waiting for a request.
United Kingdom — HMRC mileage allowance
UK private hire and ride-hailing drivers using the simplified expenses method can claim 45p per mile for the first 10,000 business miles in a tax year, then 25p per mile beyond that. Alternative: the actual costs method, where you keep receipts for fuel, repairs, insurance, vehicle finance and claim the business-use share. As with the US, you must pick one method per vehicle per tax year — you cannot mix. Most Uber drivers in the UK use the simplified mileage allowance because it's far less paperwork.
Canada — CRA per-kilometre rates
Canadian rideshare drivers can deduct vehicle expenses pro-rated by business-use percentage (kilometres driven for Uber ÷ total kilometres). The CRA's reasonable per-kilometre allowance is roughly $0.70 for the first 5,000 km and $0.64 beyond (verify the current rate for your province and tax year). Unlike the US, Canada doesn't offer a clean standard mileage rate for self-employed Uber drivers — you typically claim actual costs apportioned by mileage. A detailed logbook is essential.
Whichever country you're in: keep a clean log of every business mile (apps like Stride, MileIQ or your own spreadsheet). One year of accurate tracking is usually worth $2,000–$5,000 in tax deductions for a full-time Uber driver.
Summary: how to calculate your cost per mile
- →Fuel: (real consumption × fuel price) ÷ miles per unit
- →Vehicle wear: estimate £0.05–0.10/mile based on your model
- →Professional insurance: divide your monthly premium by your monthly mileage
- →Finance/lease: divide your monthly payment by your monthly mileage
- →Add everything up — that's your real cost per mile
Do this calculation once, keep the number in your head, and compare it against the gross fare of every trip. You'll start seeing your working day very differently.