Simplified expenses - 2 vehicles in same tax year

kate5555

Hi,

I'm currently doing my partners tax return for 2017-18 and wondered if anyone can advise about the simplified motor expenses flat rate. For info he is a self employed private hire driver.

Am I correct in assuming the 45p per mile for the first 10,000 miles is for ALL business miles, and not per business vehicle? If so, what I am unclear on is which flat rate to use under scenario 2 below.

Some background:
Car A bought in 2016 and sold July 2017. Used simplified expenses for tax return in 2016-17. 8000 business miles between Apr 2017 and July 2017. I know I have to continue using simplified expenses for car A.

Car B bought in July 2017. Have kept all receipts and mileage log as undecided whether to use capital allowance or simplified expenses. Approx 32,000 business miles between July 2017 and Apr 2018.
Actual running costs £7000, Writing down allowance £1600

Scenario 1: Simplified expenses for both car A and car B.
Total business mileage = 40,000 so 45p x 10,000 miles + 25p x 30,000 miles = £12,000

Scenario 2: Simplified expenses for car A and capital allowances for car B.
Car A: 8,000 miles x flat rate?? £3600 if 45p per mile or £2000 if 25p per mile - or some proportion based on how many of the total 40,000 miles were done by car A? Am I over complicating this?
PLUS
Car B: Capital allowance of £8600
Total = £12,200 or £10,600

Thanks in advance!

Pennywise

The 10,000 mile threshold isn't time-apportioned so you should be able to claim all the miles at 45p per mile for the first car.

Re the second car, you have to apportion the WDA and other costs between business and private mileage, so you won't be able to claim all the costs (there must be some private mileage). So if it was 90% business, you'd claim 90% of the WDA and other costs.

If you claim actual costs for car B, you're stuck with doing that for all future years until you sell it - you can't decide to revert to the mileage claim route in a future year. Maybe worth you crunching the numbers to check out that it will work in your favour in later years. You also have to add back a balancing charge when you come to sell it of the difference between the selling price and its tax written down value.

kate5555

Many thanks Pennywise.

I had forgotten to apportion the running costs of car B between business and private mileage in my actual calculation so glad you pointed that out.

Agree some number crunching / attempts at future predicting are required before I decide which route to choose but hopefully I have all the information I need to make this decision now. Thanks again.

00ec25

calmapal wrote: »

If you do 30,000+ miles a year, more often than not it’s better to get mileage...

not necessarily since OP is a self employed private hire driver and therefore can take advantage of the "taxi" rules on purchase if VAT registered