Self employment mileage claim question....

Anthear

Hi - I am thinking of becoming a self employed carer.  Most of my work will be in a town 10 miles away.  I wouldn't charge clients my travelling costs from home to their home but can I offset this cost against my profits (ie 20 miles per day at 45p a mile)?  I've had a read of some of the guidance out there but still unclear.

Many thanks

martindow

The 45p/ mile reduces your taxable income - it does not get taken off your tax bill.

I think you need to be realistic pricing your services to make sure that you cover your overheads including your driving expenses and also compensate for the time involved in travelling.

Anthear

Hi Martindow - absolutely agree, although it's 10 miles so doesn't take that long.

Is my understanding correct though?

soolin

As above if self employed you can claim the actual cost of your business mileage and it reduces the tax payable.

A very quick example would be you earn £10,000 and your motoring costs for purely business purposes are £500. Instead of paying tax on the £10,000 you would pay tax on £9500 instead.

Obviously this is very simplistic and you will have other expenses in your account, but hopefully it illustrates the fact that expenses only reduce the tax , they are not just a set off. Remember as well to ensure your insurance covers you fully, and the increase in insurance for business use is also an expense.