taxi driver needs some tax help.

taxi36

Hello to everyone.

I am new to both the forum and in my first year of being self employed.
Just trying now to get my head around everything which goes with being self employed and wanted to see if anyone could confirm that I am doing things correctly.

My questions are

1- I am using the method of claiming running costs of my taxi instead of the 40p per mile method . Do i still need to record my mileage on a daily basis ? Also , i understand that I can claim running costs of the vehicle but are repairs to the vehicle classed as an expense or are they capital allowance ? HMRC seems to suggest that repairs are to be listed under capital allowance but the other drivers I work alongside tell me they list repairs under expenses. Can anyone confirm if this right or wrong.

2- Sometimes the wife uses the car to nip to the shops or pick the kids up from school so I expect to use the car 75% for the business and the other 25% for our own personal use. I am doing the first tax return and as the total income of the business is not over the 67 thousand mark , I am able to list my expenses in one go instead of a break down of expenses but , do I have to list all the expenses on the return and then in another box of the return subtract the personal use ? Or do i do the calculations and only the business expenses ever gets noted on the return ? People tell me that you "add back" personal use but do you do this in a particular box of the tax return or do they mean you do it in your own accounts book so as to show Hmrc if they ever enquire.

3- Is there an exhaustive list of expenses list of expenses that a taxi driver can claim ? So far I have Diesel , cleaning costs , cost of badge and test , insurance , road tax , radio hire , parts , mechanic bills and tyres. Is there anything I am missing that can be claimed ?

Apologies for so many questions and thank you all in advance for all advice which will be appreciated.

Taxi36

ncthomas1

repairs - these are "Revenue expenditure" (A cost incurred in order to achieve the income) so yes they are an EXPENSE not a CAPITAL item
Mileage - I would record everything yes, as a daily total. Dont forget HMRC have access to MOT certs and DVLA info as well if they want to poke around
Wife using car - work out ALL the expenditure for the vehilcle then use the 25% to work out how much is "Allowable" and that is the figure that goes in the box. Or, you can use the box that has "Disallowable items" in it to subtract that amount. Either/ or, both as good as each other, as long as you have done it is the main thing!
Other things that may be allowable:
1. Do you wear a uniform?
Other than that, I think you have it pretty much covered. There ARE no exhaustive lists on who can claim what, each person is very individual. However, I am an accountant and the list you have put down is what I would have looked for, so I think you are spot on already> put anything weird and wonderful in ANY tax return, and you just give HMRC an excuse to poke around in your affairs. Not nice. Good luck !

taxi36

Thank you very much . Your help is appreciated.

Would you be able to take a look at this years short tax return and tell me this ;

I think you are saying that I can put my TOTAL expenses in box number 19 , this total includes ALL running costs including my Wife's use of the car.

Would it then be box number 26 where I record the 25% monetary amount for personal vehicle use ?

I tried to post a link to the return but as a new user im not allowed . Im sure you know it off by heart anyway:)

Thanks again for your assistance.

taxi36

Sorry , can I ask one more question please ?

I purchased a car to be used as my taxi. Would this be an expense or a capital allowance ?

Thank you .

ncthomas1

Capital item is the car, yes, so capital allowances 20% need to be computed on that side of things (dont forget to adjust the 25% on there for the personal use as well ok)

ncthomas1

I would use box 11
Put in there the figure AFTER making the adjustment for the personal part

ncthomas1

As well, If I were you I would log on the the hmrc web site
then type in taxi in the search bar
then lots of guidance comes up about it as taxis are quite specific so have a good read of that to make sure you know what is required fully

taxi36

ncthomas1 wrote: »

I would use box 11
Put in there the figure AFTER making the adjustment for the personal part

Because my income for the year was below £68,000 I used the option of listing my expenses as one complete figure (as per the advice on the tax return) so I didnt actually fill in box 11 at all. I then read on helpsheet SESN9 from Hmrc that if box 19 is used to record total expenses , box 26 should then be used to record any expenses that were disallowable

I will try to copy and paste that part to see if you agree.

Thanks

taxi36

Ok this is what it states on page 9 of SESN9 produced by Hmrc to help complete a short tax return :

If you have included gross expenses in boxes 10 to 18, that is, you did not
take off any disallowable expenses there, enter those disallowable amounts

here in box 26.

Im getting confused now .

ncthomas , thank you for your help.

ncthomas1

Ah ok I see, then yes that is correct

However, honestly, IMHO, I would like the expenses even though there is no requirement to do so

Nothing HMRC likes more than a "Cash" trade (which you are) putting a lump sum figure in that they then can get their hooks into to say "Right then, where has this come from/ that come from" etc

If it were me, and this is just a personal opinion, and how I do it for our Taxi Clients, I honestly would list them all

taxi36

ncthomas1 wrote: »

Ah ok I see, then yes that is correct

However, honestly, IMHO, I would like the expenses even though there is no requirement to do so

Nothing HMRC likes more than a "Cash" trade (which you are) putting a lump sum figure in that they then can get their hooks into to say "Right then, where has this come from/ that come from" etc

If it were me, and this is just a personal opinion, and how I do it for our Taxi Clients, I honestly would list them all

Next year I will list all expenses seperately then .

My return has just been submitted. Thankfully I didnt have to worry about capital allowances on this first return as I only purchased my vehicle on 9th April 2010 and so it will go on the next return to be filed next year.

Hopefully by then I will understand the system for capital allowances a bit better because I have to say that I have no concept of how to calculate it now:rotfl:.

To be honest , if Hmrc did decide to investigate me (I do agree that cash jobs would be frowned on ) I wouldnt worry too much as every penny earned goes into the books and all expenses claimed are genuine and I have receipts to back up each and every expense. Trouble is , The car I purchased in April was a lemon and I have spent an absolute mint on it , almost every month it needs something or other fixed !

Parts , mechanic bills , tyres , not to mention the ever increasing cost of diesel have meant that my expenses this year look set to be around HALF of my total yearly income !!!

Thanks again