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Self employed using own car.

I am recently self employed. Last tax year, using my own car, I did 22000 plus business miles for which I claimed the 45p and 25p rates.

This was the first year that I had been self employed and the first time that my largest customer had ever used someone such as me.

They generously gave me a 24p per mile allowance when on their business BUT on reflection after having done my tax return, this bumps up my tax because I declare this as income and as such lose the benefit of the 45p a mile!? It is also a waste of money to them.

Can I ask that they instead buy my diesel fuel by either supplying a credit card or by me submitting claims for fuel according to my business miles for them calculated on my average mpg?

I know this will still be income but it will save them money and reduce my tax.

Comments

  • Notmyrealname
    Notmyrealname Posts: 4,003 Forumite
    edited 6 July 2012 pm31 12:43PM
    > They generously gave me a 24p per mile allowance when on their business BUT on reflection after having done my tax return, this bumps up my tax because I declare this as income and as such lose the benefit of the 45p a mile!?

    No you don't. I've tried to think of a way to explain it but you'd be better getting a tax accountant to explain how to enter it into your accounts than trying to work out the jumbled mess I've just deleted.

    If they buy your fuel that is still classed as income but then you can only claim the percentage of running costs of the car which is business use and not the 45p per mile and believe me, you'll lose out.
  • HappyMJ
    HappyMJ Posts: 21,115 Forumite
    10,000 Posts Combo Breaker
    Instead of claiming 45p and 25p you would claim the difference being 21p and 1p.
    :footie:
    :p Regular savers earn 6% interest (HSBC, First Direct, M&S) :p Loans cost 2.9% per year (Nationwide) = FREE money. :p
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