Mileage / Fuel / Travel Expenses for Tax Purposes

pid2004

Hi everyone,
Help please.
If you work for yourself (self employed), which is tax deductible travel expenses ?
1. your petrol in your own car
2. do u claim mileage rather than fuel?
3. can you claim your car insurance cost?
4. what about wear and tear on the car?

to give you a background......personal car is used for work. Car is filled with petrol weekly and used for work and personal use. So what is really tax deductible?

Any advice appreciated.
xx

Colin2511

2. do u claim mileage rather than fuel?

I have my own car that I use for work and personal;

I have a mileage sheet, which is filled in daily, with miles done (and total miles so they can see private)/ 40p per mile first XX miles (I think its 10k miles but I dont do that many). 45p per mile if 2 employees in same car

I don't deduct anything else, as I did not think I could (and will slap my accountant if someone replies on here and I realise I have not been claiming everything I could)

fengirl_2

You have a choice as to which method of allowing for motoring expenses you use:
1. The fixed rate mielage allowace of 40p pm for the firsy 10,000 miles and 25p pm thereafter.
2. The actual method where you include all the car running costs from petrol to insurance, to repairs and road tax. You include all these costs in your accounts and when you come to self assess, you add back the private proportion of the costs, so you only get tax relief for the business costs.
Once you choose one, you can only change your mind once and if you are VAT registered you have to use (2).

greent

fengirl wrote: »

You have a choice as to which method of allowing for motoring expenses you use:
1. The fixed rate mielage allowace of 40p pm for the firsy 10,000 miles and 25p pm thereafter.
2. The actual method where you include all the car running costs from petrol to insurance, to repairs and road tax. You include all these costs in your accounts and when you come to self assess, you add back the private proportion of the costs, so you only get tax relief for the business costs.
Once you choose one, you can only change your mind once and if you are VAT registered you have to use (2).

we have a limited co - DH is self employed. However, we use the 1st method and the limited co is vat registered. This is how our acctant advised it.

fengirl_2

If your OH is a director, then he is an employee, not self employed. The relief you are talking about is personal to your OH, nothing to do with the company which is a spearate entity.

Colin2511

we are also directors of our limited company that is vat reg and we use 1...so thanks for that fengirl, I will pass to accountant for him to check, as I could claim more in method 2 way I think..

fengirl_2

Beware that if you are a director of a limited company, it would be the company which would claim the motoring expenses in respect of a company owned car on which you would be taxed as a benefit in kind.

tnor_fo_tkcab

Hi fengirl,

I'm self employed (sole trader) & VAT registered & own my own car. On advice from my accountant in 2004 I've been using method 1 but having read your post I'm now concerned that I should have been using method 2 ? Have I done something wrong, will I go to jail & will I need to go back over the last 6 years of expenses ??

Jac

fengirl wrote: »

You have a choice as to which method of allowing for motoring expenses you use:
1. The fixed rate mielage allowace of 40p pm for the firsy 10,000 miles and 25p pm thereafter.
2. The actual method where you include all the car running costs from petrol to insurance, to repairs and road tax. You include all these costs in your accounts and when you come to self assess, you add back the private proportion of the costs, so you only get tax relief for the business costs.
Once you choose one, you can only change your mind once and if you are VAT registered you have to use (2).

fengirl_2

Yes, you do need to use method 2 if you are VAT registered because you will have been claiming VAT back on all your motoring costs but this is not reflected in your accounts. I would say switch for this year - take advice from your accountant. Only people who think they are above the law go to jail.

pid2004

Oh wow...thank you guys for your help on this.

I am slightly confused going through some of the above so I am going to try and explain it the best I can...if I am wrong...pls tell/shout at me!

1. If you are self employed and NOT vat registered, the you can :
(A) Claim The fixed rate mielage allowace of 40p pm for the firsy 10,000 miles and 25p pm thereafter. OR
(B) The actual method where you include all the car running costs from petrol to insurance, to repairs and road tax. You include all these costs in your accounts and when you come to self assess, you add back the private proportion of the costs, so you only get tax relief for the business costs.

2. If you are self employed and are vat registered, then you can only have A above.

3. If you are a director/employee of your company and it is VAT registered, then you can only have A above.

4. If you are a director/employee of your compnay and it is NOT VAT registered, then you can ......i dont know this one!!

FENGIRL........you seem like the whizz on this...help.....?

fengirl_2

1. Correct
2. Correct
3. it depends on who owns the car. if the car belongs to the company, then the company pays all the running costs and includes these expenses in its accounts. The car is assessable as a benfit in kind on the director. If the director owns the car, then he can only use method 1(A) to either reclaim his business mileage from the company (in which case the company also gets releif for what it reimburses him), or through his self assessment (in which ase he onlt gets relief at his highest rate).
4. The answer is the same as 3.