Business Mileage Rates - Have I Got This Right?

ToMoCo

OK - Here goes,

Have spent so much time running my Ltd company that my personal finaces are shot. Time to sort it all out.

I don't run a company car, use my own car for traveling to meetings etc.

Now, based on the 40/25ppm rates, how does it actually work?

I cover about 18k business miles a year. can I take £6000 tax free from the company?

For example (figures simplified) in a month I have: -
Client meeting Manchester - 300 miles round trip
Site Visit Glasgow - 500 miles
Client meeting - London - 200 miles
Client meeting - Edinburgh - 500 miles

So at the end of the month can I draw £495.00 (800 x £0.40 + 700 x £0.25) from the company or have I got the wrong end of the stick?

Hope this makes sense. Any help / clarification appreciated.

donnalove

ToMoCo wrote: »

OK - Here goes,

Have spent so much time running my Ltd company that my personal finaces are shot. Time to sort it all out.

I don't run a company car, use my own car for traveling to meetings etc.

Now, based on the 40/25ppm rates, how does it actually work?

I cover about 18k business miles a year. can I take £6000 tax free from the company?

For example (figures simplified) in a month I have: -
Client meeting Manchester - 300 miles round trip
Site Visit Glasgow - 500 miles
Client meeting - London - 200 miles
Client meeting - Edinburgh - 500 miles

So at the end of the month can I draw £495.00 (800 x £0.40 + 700 x £0.25) from the company or have I got the wrong end of the stick?

Hope this makes sense. Any help / clarification appreciated.

when you are claiming your miles you have to claim the first 10,000 at 40p then anything over at 25p.

you can't split it(40+25)every month, but you can pay less than 40p to cover the 18.000 say 32p a mile upto 20,000

ToMoCo

Thanks for the reply.

As my mileage would be well over 1k a month I thought capping the 40p claim at 800 miles a month would prevent claiming too much. Your example of 32p a mile sounds good and keeps it simple.

So in theory, I can make up some sort of spreadsheet to document my trips and write myself a cheque at the end of each month?

eg.. month 1 1500 miles - £480 @ 32p
month 2 1200 miles - £384
month 3 1500 miles - £480
etc.

Should fuel receipts be attached to each claim?

donnalove

HI

you wouldn't need to keep fuel recipts as you are claiming the tax allowance millage. But you do need to keep accurate records of journeys made including documentation or proof of trips.

MarkyMarkD

I don't agree with donna.

If you are doing over 1k every month, then your suggestion of spreading the 10,000 miles over the year is the best way to do it. But 10,000/12 = 833, not 800.

All HMRC care about is that the total amount claimed is not over their allowable amount, not when it was paid during the year.

donnalove

MarkyMarkD wrote: »

I don't agree with donna.

If you are doing over 1k every month, then your suggestion of spreading the 10,000 miles over the year is the best way to do it. But 10,000/12 = 833, not 800.

All HMRC care about is that the total amount claimed is not over their allowable amount, not when it was paid during the year.

yes but he is doing over 10,000 a year and Only the first 10,000 can be at 40p the rest would be at 25. it works out the same by lowering the 40p but spreads more easily.

if you read op's post he does 18k milage a year

MarkyMarkD

I know he does 18k a year.

So his original suggestion of paying himself 833* miles a month @ 40p and the rest @ 25p works perfectly. Over a year, he'll have paid himself 9,996 miles @ 40p and the rest @ 25p which HMRC will be happy with.

* OK, his number was 800; 833 is better, but the principal is there.

amf

MarkyMarkD wrote: »

All HMRC care about is that the total amount claimed is not over their allowable amount, not when it was paid during the year.

Its true that HMRC care not how you do it, so long as the amount paid annually is within the statutory rates. Either way suggested will be just fine.

As Donna also pointed out - it is important than the business mileage records stand up to inspection (the sight of records showing that all business journeys ending in 0 - or even worse 00 - in the miles column, will stick out like a sore thumb).