Mileage, car-sharing and tax oh my...

Robsia

I have just started working as a contracted Project Manager along with another guy who lives about an hour away. We often have to both go to meetings and we have agreed to car share.

He lives just off the M6 on the way to where the meetings so I virtually have to drive past his house. So, either I will pick him up and drive to the meeting, or I will drive myself to the pick-up point and we will go in his car.

We have agreed to take turns and pay each other half of the fuel for the shared part of the journey.

As a self-employed person, if I drove myself every time I could claim mileage at 45p per mile, but can I claim the money I pay him for car-sharing? And vice versa?

zygurat789

Robsia wrote: »

I have just started working as a contracted Project Manager along with another guy who lives about an hour away. We often have to both go to meetings and we have agreed to car share.

He lives just off the M6 on the way to where the meetings so I virtually have to drive past his house. So, either I will pick him up and drive to the meeting, or I will drive myself to the pick-up point and we will go in his car.

We have agreed to take turns and pay each other half of the fuel for the shared part of the journey.

As a self-employed person, if I drove myself every time I could claim mileage at 45p per mile, but can I claim the money I pay him for car-sharing? And vice versa?

Yes, this is an expense incurred wholly and exclusively.... But don't forget when he pays you you should bring it into your accounts as income.
You can also claim an additional 5p per mile for a passenger.
Have you considered the alternative method?

Robsia

Thank you for your reply - do we need to give each other receipts?

What do you mean by "the alternative method"?

Aquamania

Robsia wrote: »

I have just started working as a contracted Project Manager along with another guy who lives about an hour away. We often have to both go to meetings and we have agreed to car share.

He lives just off the M6 on the way to where the meetings so I virtually have to drive past his house. So, either I will pick him up and drive to the meeting, or I will drive myself to the pick-up point and we will go in his car.

We have agreed to take turns and pay each other half of the fuel for the shared part of the journey.

As a self-employed person, if I drove myself every time I could claim mileage at 45p per mile, but can I claim the money I pay him for car-sharing? And vice versa?

If you take turns, then surely there is no need for either party to pay the other half the cost. If you do, surely you will be just passing the same money between yourself? :huh:

zygurat789

Robsia wrote: »

Thank you for your reply - do we need to give each other receipts?

What do you mean by "the alternative method"?

The car is a "business car" so all the expenses are paid for by the business
and a private proportion (business mileage/total mileage) is added back before tax. Capital allowances are also claimable on the car at the appropriate rate.

The rate per mile tends to work best for an old car, not worth much, doing a high business mileage. The business car method tends to work best for high value cars with low private mileage.

PasturesNew

zygurat789 wrote: »

Have you considered the alternative method?

I'd be using the alternative method, if the mileage covered was conducive

zygurat789

PasturesNew wrote: »

I'd be using the alternative method, if the mileage covered was conducive

I have a vague feeling, pastures, that that is meant to be slightly smutty.

getmore4less

Aquamania wrote: »

If you take turns, then surely there is no need for either party to pay the other half the cost. If you do, surely you will be just passing the same money between yourself? :huh:

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You claim for your miles to his house and each trip from there when you drive, he claims the others.

Simple.

Robsia

Aquamania wrote: »

If you take turns, then surely there is no need for either party to pay the other half the cost. If you do, surely you will be just passing the same money between yourself? :huh:

If the meetings were always in the same place then I would agree, yes. But the first one was in Kent so we agreed that I would drive and he would pay me, then they told us there was another one next week in Birmingham so we said we'd do it the other way round.

We've only just started doing this so we'll see how it goes. If it turns out this is a regular thing and they are mostly in the same place, Birmingham say, then yes we will probably come to the same conclusion that we're just passing the same money between us and only pay extra if it is further away than usual.

Robsia

zygurat789 wrote: »

The car is a "business car" so all the expenses are paid for by the business
and a private proportion (business mileage/total mileage) is added back before tax. Capital allowances are also claimable on the car at the appropriate rate.

The rate per mile tends to work best for an old car, not worth much, doing a high business mileage. The business car method tends to work best for high value cars with low private mileage.

I'll have to look into that - the car is fairly new, bought solely because it is far more economical than my old one so at a flat rate of 45p per mile I'd be better off with the new one that has far lower fuel costs than the old one, but I can still claim the same mileage rate.

getmore4less

Robsia wrote: »

If the meetings were always in the same place then I would agree, yes. But the first one was in Kent so we agreed that I would drive and he would pay me, then they told us there was another one next week in Birmingham so we said we'd do it the other way round.

We've only just started doing this so we'll see how it goes. If it turns out this is a regular thing and they are mostly in the same place, Birmingham say, then yes we will probably come to the same conclusion that we're just passing the same money between us and only pay extra if it is further away than usual.

Just keep a track of the miles and average them out over time if this become a regular thing.