Car mileage and expenses

azaharchica

Hi, have been looking for the answer to my question but nothing fits exactly.

Self Employed Carer and have just purchased a car, prev used public transport.

I charge the client 45p per mile for travel in addition to the weekly fee which goes on my invoice to the client.

I see from these posts that you can claim 45p per mile as an expense. Does this mean that i do not have to put thru the petrol receipts, mot receipts, road tax, insurance costs and AA or RAC etc? Coz I sort of thought that because my business mileage will be relatively low per annum, that I would have an tax advantage in listing all these separate expenses of car running.

What about the relatively small amount of private mileage that I do, how is this taken into account?

thanks,

CLAPTON

you can claim as an expense the difference between 45ppm and the amount you are paid (for the first 10,000 miles)

so in your case you can claim nothing for the first 10,000 miles and would owe HMRC for any miles over that.

Linton

CLAPTON wrote: »

you can claim as an expense the difference between 45ppm and the amount you are paid (for the first 10,000 miles)

so in your case you can claim nothing for the first 10,000 miles and would owe HMRC for any miles over that.

Strictly speaking arent you supposed to declare the 45p/mile as income, get taxed on that and claim the tax back via a 45p/mile business expense? I had understood that only HMRC authorised people could pay tax free expenses (eg large employers). But perhaps I am confused.

pjclar02

azaharchica wrote: »

I see from these posts that you can claim 45p per mile as an expense. Does this mean that i do not have to put thru the petrol receipts, mot receipts, road tax, insurance costs and AA or RAC etc? Coz I sort of thought that because my business mileage will be relatively low per annum, that I would have an tax advantage in listing all these separate expenses of car running.

What about the relatively small amount of private mileage that I do, how is this taken into account?
,

As you are self-employed, you can choose to either claim 45p per mile or you can claim a proportion of your normal running costs, so you need to work out which is better for you.

If you go down the route of claiming your running costs (insurance, fuel, repairs etc), then you will need to work out your business use percentage of the vehicle, and you adjust for (disallow) the private usage percentage. You cannot claim all costs, if your business mileage is low - say 20% then you can only claim 20% of the car costs. You can also claim capital allowances if you go down this route. Typically, the older the car, the more maintenance it will need and the more likely it will be better to claim a percentage of running costs!

John_Pierpoint

Linton wrote: »

Strictly speaking arent you supposed to declare the 45p/mile as income, get taxed on that and claim the tax back via a 45p/mile business expense? I had understood that only HMRC authorised people could pay tax free expenses (eg large employers). But perhaps I am confused.

Yes you are slightly confused, this is a sole trader working as a carer.

Invoice £1,100 including £100 of travel costs (of car mileage has been charged at £0.45 per mile)

allowable expenses 222.22 miles of car usage charged at £0.45

Taxable profit from trade £1000.

31st January: Here you are mr tax man £200.

[Probably plus class 4 National Insurance minus payments in January and July and plus a new January payment on account to try to square up the current tax year but let us not complicate the concept].

azaharchica

pjclar02 wrote: »

As you are self-employed, you can choose to either claim 45p per mile or you can claim a proportion of your normal running costs, so you need to work out which is better for you.

If you go down the route of claiming your running costs (insurance, fuel, repairs etc), then you will need to work out your business use percentage of the vehicle, and you adjust for (disallow) the private usage percentage. You cannot claim all costs, if your business mileage is low - say 20% then you can only claim 20% of the car costs. You can also claim capital allowances if you go down this route. Typically, the older the car, the more maintenance it will need and the more likely it will be better to claim a percentage of running costs!

thanks to all who replied, this one by PJCLAR answers my question best. I dont expect personal mileage to be very much and annual overall mileage will also be relatively low, maybe 3,000 pa. so i am better going down this "running costs" route rather than the 45p one. By the way it is a cheap car - 600 quid.

but another question please - only got this car end of december. before that quite often i would get a lift to railway station and give a few pounds petrol money.

But on my client invoice i would charge say half of the mileage cost (just the outward journey to the station and not the return), as i didnt officially have a car then. So when it comes to the tax return can i do up to December on the basis of claiming the 45p per mile to offset the 45p´s invoiced, and then the running costs from december? or am i making this complicated. If this is possible then would i just lump it all together when i have calculated it on the tax return or would it have to be shown in different places ?

thanks,

John_Pierpoint

On your level of income you are likely only to report three figures:
billings minus expenses equals profit.

In the unlikely event that you get audited you will need to be able to explain how you arrived at your figure for expenses.