Business/personal use

secret_tramp

Forgive me if this is covered elsewhere. I run a small business from home.

I use my car for mostly business use - being a secret tramp I have few friends or family.

I want to keep my affairs as simple as possible and so I have apportioned my car use 75% business and 25% personal. This is being quite generous to the tax man, but I don't want to fall foul of any rules.

Is this ok? Obviously my diary provides details of where I go. Should I keep records of every single personal journey?

To reiterate I like to keep things as simple as possible.

Many thanks in advance for help/advice given.

Ps I do the same thing with my telephone.

PlutoinCapricorn

I am sure that many people have similar problems where percentages are concerned. You have come to the right place for advice.

Is your profit usually under £15,000 ? If so, could you if necessary provide evidence of the business calls i.e. itemised bills to back up the percentage that you are claiming?

When you filled in your first self assessment return, did you use the comment box to state the estimated percentages? I have seen this advised. Do your percentages make sense in terms of the work that you do? For example, someone describing themselves as a home based researcher should not be claiming a lot of car related expenses, but may well be able to claim a higher percentage of running costs such as electricity than someone who is always out and about.

Are your figures much the same each year? Have you ever had any questions from HMRC?

secret_tramp

The business is still only in its infancy (4th year) and yes, the profits have been quite low so far.

The telephone company bills me online and itemised records are available. I'm not sure how long they are kept but I haven't printed any off (perhaps I should do).

My job involves me visiting clients at their home or office. I also have to travel for my courses/training.

No, I haven't made any comments on the tax return - I just enter the net profit (sole trader). I have not had any problems from HMRC so far, but as the business grows I am wanting to make sure that I don't have any problems later with my slightly crude method of apportioning the usage.

I suppose I ought to itemise every single mile covered for, say, 3 months in case the revenue challenge it. Is that a good idea? I am certain that as things stand the percentages are well in the revenue's favour.

NB The work that I do from home I don't bother to claim for electric/heat/rent etc either.

Horace

You could claim mileage at 40p a mile which is what I do for my car - I guess I am lucky in that I have two trip meters on my car too so that I can work out the mileage for a work journey - I note it all down in a book.

Also if you work from home it makes sense to claim a proportion of your household bills for work.

The HMRC has a very good self employment helpline and they will be able to tell you what you can and cannot claim for.

It may also be of benefit to employ an accountant too.

tyllwyd

secret_tramp wrote: »

The telephone company bills me online and itemised records are available. I'm not sure how long they are kept but I haven't printed any off (perhaps I should do).

If it was me I would print off the itemised bills, and then total up the cost of your business calls so you can get the actual figure. I think (looking at the Telegraph article here http://www.telegraph.co.uk/finance/personalfinance/consumertips/4799240/Financial-tips-for-the-self-employed.html) that you can also claim a proportion of the line rental.
[Edited to say - it is mentioned here http://www.hmrc.gov.uk/manuals/bimmanual/BIM47820.htm]

In that article it also says "If a vehicle is used for both business and private purposes then the capital allowances and the total running expenses will be split in proportion to the business and private mileage. You will need to keep records of your total mileage and the number of miles travelled on business to calculate the correct split." That would imply that you should be keeping a proper record of business miles.