How to Choose the Right Annual Mileage for a Car Lease

Take the miles you genuinely drive in a year, add about 10%, then round up to the nearest 1,000. That is the figure to put on your lease. Guessing low to shave a few pounds off the monthly rental is the single most expensive mistake in leasing - you pay for those miles anyway, at the end, in one go.

How do I work out my annual mileage?

Add up your regular journeys for a typical week, multiply by 46 to allow for holidays and weeks you barely drive, then add your known one-offs - trips to see family, holidays in the UK, the annual drive to Cornwall. Add 10% to that total and round up to the nearest 1,000.

Most people underestimate, and they underestimate in a predictable way: they count the commute and forget everything else. The school run, the supermarket, the Saturday football pitch two towns over, the hospital appointments. Those journeys are short and unmemorable, and collectively they can add thousands of miles a year.

The quickest sanity check

If your current car is more than three years old, look up its MOT history on the free GOV.UK MOT history service. Every test records the odometer, so the gap between two consecutive tests is your actual mileage for that year - not a guess, a record. Do that for the last two or three years and you'll see your real pattern, including the year you thought was quiet but wasn't.

A worked example

Say your round-trip commute is 24 miles, three days a week, and other running about comes to roughly 60 miles a week. That's 132 miles weekly, or 6,072 miles over 46 weeks. Add a fortnight in Devon and a few long weekends - call it 900 miles - and you're at 6,972. Round the estimate to 7,000, add 10% (700) to get 7,700, then round up to the nearest 1,000: 8,000 miles a year.

For context, Department for Transport National Travel Survey data put the average car in England at around 7,100 miles a year in 2024, with petrol cars lower and diesels higher. Averages are a useful reality check on a wild guess. They are not a substitute for your own numbers.

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What happens if you go over your mileage allowance?

You pay an excess mileage charge - a pence-per-mile rate written into your agreement, applied to every mile above your total contracted allowance and billed after the vehicle goes back. It is assessed once, on the odometer reading at handback, not annually. Nothing is charged mid-contract.

That last point trips people up constantly. The allowance is annual in name only. On a 36-month contract at 10,000 miles a year, you have 30,000 miles for the whole term. Do 15,000 in year one because of a temporary work project and 7,500 in each of the following years and you finish on 30,000 - no charge. What counts is the total.

What does the charge actually cost?

Rates differ enormously between funders and vehicles, because the charge exists to recover the extra depreciation those miles cause. Premium and higher-value cars usually carry higher rates than mainstream models. Fleet News reported that the industry average moved from 11ppm to 12ppm in its 2025 analysis of end-of-contract charges - a reasonable planning figure, but never a substitute for the rate on your own order form.

Illustrative example: a 36-month lease at 10,000 miles a year gives 30,000 total miles. You hand the car back on 34,000. That's 4,000 excess miles. At 12p per mile the charge is £480. At 20p per mile - not unusual on a premium model - it's £800.

Ask us for the ppm rate before you commit. It's a genuinely useful comparison point between two otherwise similar deals - a slightly cheaper rental with a punishing excess rate is not always the better contract. Our guide to comparing lease deals and spotting a good one covers the other numbers worth weighing up.

Does a higher mileage allowance cost much more per month?

Usually less than people fear. Extra miles lower the car's forecast value at the end of the term, so the rental rises - but the increase is spread across every month, and it is often cheaper than paying for the same miles at the excess rate afterwards. On some deals, though, the jump between mileage bands is steep. Check, don't assume.

There's a simple test. Take the extra monthly cost of the higher allowance, multiply by the number of monthly payments, and compare it with what those extra miles would cost at your contract's ppm rate.

Illustrative example: moving from 10,000 to 12,000 miles a year adds £9 a month on a 36-month deal. That's £9 × 36 = £324 for 6,000 extra miles across the term. At 12p per mile, those 6,000 miles as excess would cost £720. Buying them up front wins comfortably. Now flip it: if the uplift were £25 a month, that's £900 over the term - more than the £720 excess charge, so the lower allowance plus an accepted overage would be cheaper, assuming you're confident in the estimate.

The catch with that second scenario is certainty. Excess charges are hard to predict because life is; the rental uplift is fixed and known. Most of our customers prefer the known number, and honestly, so do we when advising.

And that unused-miles point deserves saying plainly, because it's the honest counterweight to everything above: no UK contract hire agreement refunds you for miles you didn't drive. Buying 20,000 a year "just to be safe" when you'll do 9,000 is money handed over for nothing. The 10% buffer exists precisely because it's proportionate.

Which annual mileage suits which kind of driver?

Match the allowance to your actual pattern, not to a round number that sounds sensible. The bands below cover the common profiles we see, with the thing to watch out for in each. Whichever band you land in, apply the same rule first: honest estimate, plus 10%, rounded up to the nearest 1,000.

What if your driving is about to change?

Base the figure on the life you're going to be living, not the one you've just had. A new job with a longer commute, a move out of the city, a child starting a school across town, retirement coming up - all of these move the number by thousands. If a change is likely but not certain, lean towards the higher band. The cost of being slightly over-provisioned is small and monthly; the cost of being badly under is a lump sum.

How mileage and lease length work together

Mileage and term are two halves of the same decision, because the funder prices the car on total contracted miles. A 24-month deal at 12,000 miles a year and a 36-month deal at 8,000 both come back with 24,000 on the clock - similar wear, similar resale position, very different monthly outcomes for you.

A longer term generally lowers the monthly rental, but it also multiplies any estimating error. Get your mileage wrong by 2,000 a year on a 24-month contract and you're 4,000 miles over. The same error on a 48-month contract is 8,000 miles over - at 12p, that's £960 rather than £480. Longer contracts demand a more honest estimate, not a more optimistic one.

If you genuinely can't see past the next couple of years, a shorter term is the safer structure even if the monthly is higher. Our guide on choosing between 24, 36 and 48 months goes into the trade-offs properly.

Does high mileage change anything else about the car?

It changes what you should be shortlisting. Big annual mileage points towards comfortable, efficient motorway cars and makes a maintenance package more attractive, since you'll get through tyres and services faster. It also matters for electric vehicles - if a large slice of your miles are long motorway runs without home charging, the running-cost case needs checking rather than assuming. Our electric car lease deals pages list official range figures for each model.

One more practical point that catches people out: fair wear and tear. BVRLA fair wear and tear standards define what condition a vehicle should come back in, and they make allowance for the miles covered - a car that has done 60,000 miles isn't held to the same cosmetic standard as one that has done 20,000. Excess mileage and wear-and-tear charges are assessed separately, and only the condition side is judged against the BVRLA guidelines.

Can you change your mileage mid-contract?

Often, yes. Most funders will consider a mid-contract mileage revision, which recalculates your remaining rentals to cover the extra miles. It is normally cheaper than paying the excess rate at the end - but only if you ask early. Once you're already over, there's usually nothing left to restructure.

So track your pace. It takes thirty seconds: multiply your annual allowance by the number of years on the agreement to get your total budget, divide by the number of months in the term to get a monthly figure, then compare that against where your odometer actually is. Do it at six months and again at eighteen. If you're running 15% ahead at the halfway point, pick up the phone - to us or to the funder - rather than hoping the second half is quieter.

Does mileage matter differently for business drivers?

The estimating job is the same, but two things differ. Excess mileage on Business Contract Hire is charged plus VAT, and it's treated as a service charge for accounting purposes. Separately, your annual mileage has no effect on company car tax - Benefit in Kind (BiK) is calculated from the car's list price and CO2 emissions, not from how far you drive it.

That surprises people. According to HMRC's guidance on company car tax, the taxable benefit depends on the vehicle's list price and its emissions band. Under HMRC's published company car tax rates, petrol and diesel cars sit roughly in the 15% to 37% range depending on CO2, while fully electric cars are taxed at a far lower percentage - a gap that's driven a great deal of the growth in salary sacrifice car schemes. A 30,000-mile-a-year driver and a 6,000-mile-a-year driver in identical cars pay identical BiK.

Where mileage does bite for businesses is fuel and servicing budgets, and the excess charge itself. If several vehicles on a fleet are quietly running 20% over their allowances, that's a four-figure surprise arriving at the same time. Worth a spreadsheet, not a hope.

Your mileage decision checklist

Run through these six steps before you sign anything. They take about ten minutes and they're the difference between a contract that ends quietly and one that ends with an invoice you didn't budget for.

If your estimate genuinely sits right on a band boundary, go up. The extra few pounds a month buys you the freedom to say yes to a long weekend without doing sums in your head, and that's worth something.

Frequently Asked Questions

Written by the leasing team at First Vehicle Leasing, an FCA-authorised and regulated broker and BVRLA member with over 25 years' experience arranging personal and business vehicle leases across the UK. Guides are reviewed and updated as rates, tax years and regulations change.