Personal car purchase - what can I claim?

lwaghorn

This is my first post so please be gentle!!!
I have been self employed for approx 18 months so am about to complete my first self assessment form.
I operate a business / marketing consultancy from home but do the majority of my work for one client approx 20 miles away. Shortly after registering self employed I purchased a brand new car on finance. The car is used approx 40% of the time for work. Does that mean I can claim 40% of my monthly finance loan through the business? Or can I only claim mileage?

Any advise gratefully recieved.

Many thanks
Lucy

Rolo_Tomasi

There are two ways in which you can include vehicle expenses in your accounts. The first is to keep a log of all of your business miles and then use the Revenue approved rates of 40ppm for the first 10,000 miles and 25ppm for any excess.

The other way is to keep a record of all of your vehicle running costs (fuel, tax, insurance, repairs and any interest on a loan to purchase) and apply the appropriate percentage of business use to this amount. Using this method you can also claim Capital Allowances of 20% of the cost of the vehicle (less any private use).

You will have to do the maths to see which option gives you the most tax relief however once you have chosen a method you can only switch to the other way when you change your vehicle. Its also worth noting that you can only use the mileage method if you turnover is below the VAT registration limit (about £68k).

lwaghorn

Thanks for your reply, I think I will go for mileage as it seems much more straight forward. I'm sure I will have many more questions over the next week or so!!!!