Mileage - Sole Trader (again!)

d_bravo

Hi,

Have searched to no avail so I'm afraid it's another mileage question. As a sole trader in my first year of business I am keeping a mileage log in the hope of claiming the 40ppm allowance. What I am unsure of is:

1. How this is claimed by a sole trader, is it just a P87 at the end of the tax year?
2. How is it paid by the tax office - is it just a reduction in tax or an actual reimbursement equivalent to 40ppm?
3. What if I only break even or make a loss - will the mileage claim be of benefit to me if it comes in the form of a tax allowance?
4. I am also in full-time employment, does this affect any of the above?

Thanks very much in advance!!

freyasmum

As I understand it...

1. It is entered in the allowable business expenses part of your tax return.
2. It's not actually paid back to you. It will be deducted from your net profit (hopefully ) when your bill is being calculated.
3. It most definitely will be of benefit to you. Anything that reduces the tax is a good thing
4. You will be using up your tax free allowance via your employment, so you will pay tax on any profit your business makes. But as your travelling expenses are an allowable expense, they won't make any difference - you'll still be allowed to discount them from your net profit.

Remember, it's only 40ppm for the first 10,000 miles. It's 25p for every mile thereafter.


ETA: You can't claim if you are travelling to and from a static place of work.

Treading_Water

Remember even if the mileage (or any other allowable costs) should take you onto a loss - still declare them, as any losses can be carried forward against profits in future years.

d_bravo

Thank you both. At the moment I compile my books monthly as the business doesn't warrant weekly accounting. For my first month I have multiplied my mileage by 0.4 and entered that into motoring expenses. Can someone just confirm this is correct?

Also, if I'm in deficit does the tax allowance roll over to the next tax year relatively straightforwardly? Will I then have, in effect two personal allowances. One for my full-time job and one for business? Obviously this is assuming I make a loss but I'm planning for the worst!!

Thanks all