Self-employment - reimbursement of mileage costs

cadenza82

For someone who is self-employed, what is the position as regards reimbursement of mileage costs? Dad has recently started doing some freelance work. Along with the fee for doing the work, he also claims mileage which they pay, presumably at HMRC rates.

How does this need to be recorded and shown on the tax return? Is it enough to simply keep a log of the mileage done (which is necessary anyway), then show this as an expense on the tax return? Would the money he receives for mileage simply be shown as part of the income?

Thanks.

Nicola_Ed

Hi

The mileage your Dad receives is just part of the amount he charges the customer for his work. If he is VAT registered then VAT needs to be charged on the full amount including the mileage. The total then forms part of his turnover. He then needs to decide how he will claim a deduction for his motoring costs. If his turnover is below the VAT limit, it may be simpler to claim a deduction using the HMRC mileage rates ( as oppose to keeping detailed records of all the costs and then only caliming the businuess % of the total) The link to the relevant section of the HMRC website is below.

http://www.hmrc.gov.uk/manuals/bimmanual/BIM47701.htm