Please help..Still unclear about 40p fuel allowance

imtitch

Firstly,I'd like to thank the 3 replies to my previous question. Unfortunately I don't seem to be any any further forward.Basically the question is as a domestic cleaner (newly registered as self employed) can I claim the 40p mileage allowance? I have looked at HMRC site and this isn't clear.
If so, is it only to a place to work;one way, or to a place and back home? Where on the self employment form do I put this if I can claim?
Can I claim for costs of heating/lighting at home just to do my records?

All answers would be appreciated.

jimmo

If I remember your previous question correctly you currently have one client but are clearly looking for more. With only one client, the taxman is most likely to view you as a domestic employee of your client. Even if he accepts that you are self-employed then your one place of business is going to be your client’s house. The expenses of travel between your home and your place of business is ordinary commuting and not allowable for tax purposes.
If your business expands and you get more and more clients then, there will come a time when the taxman will accept that you are running a business from your home and your home is actually a place of work.
Once that happens, then any journeys from your home (base of business) to clients’ homes and return will become business journeys, allowable for tax purposes.
As regards the costs of heating /lighting at home just to do your records then, at the present time it’s a non-starter. You only have one client. How many records do you have to keep?
Once you have a number of clients it becomes more of a reality that you do have to spend time at home on record keeping.
The usual answer then is to claim £2.00 per week.
As a personal opinion I think that you really need to concentrate your efforts on establishing your business and worry about the tax later.

imtitch

jimmo wrote: »

If I remember your previous question correctly you currently have one client but are clearly looking for more. With only one client, the taxman is most likely to view you as a domestic employee of your client. Even if he accepts that you are self-employed then your one place of business is going to be your client’s house. The expenses of travel between your home and your place of business is ordinary commuting and not allowable for tax purposes.
If your business expands and you get more and more clients then, there will come a time when the taxman will accept that you are running a business from your home and your home is actually a place of work.
Once that happens, then any journeys from your home (base of business) to clients’ homes and return will become business journeys, allowable for tax purposes.
As regards the costs of heating /lighting at home just to do your records then, at the present time it’s a non-starter. You only have one client. How many records do you have to keep?
Once you have a number of clients it becomes more of a reality that you do have to spend time at home on record keeping.
The usual answer then is to claim £2.00 per week.
As a personal opinion I think that you really need to concentrate your efforts on establishing your business and worry about the tax later.

Thanks for taking time to give an answer.
Just a line to say that I do have two clients weekly that I go to and hope to get more very soon.I didn't want to get too big without sorting the basics out first and running into problems later. I do tend to worry.Anyway thanks again and any other tax/business advice would always be appreciated.

Linda_Secker

Hi Imtitch

Your place of business is your home, since you have more than one client. So all mileage to either client and home and/or between clients is business mileage.

It is important that you keep a record of your mileage for business...if you have an accountant at some point int he future he/she will wnat to see a proper record kept so you may as well get into the habit now, even if you intend to do your own tax return this year.

As an 'allowable expense for tax' you include your business mileage in the figure for all your other expenses (materials, business insurance, tools etc etc). There is a 'working sheet' to add up the totals for this in the guide that comes with the tax return.

The tax return has apparently changed a bit this year, and I haven't got mine out of hte envelope yet, so I don't know exactly where this total goes. In the working sheet it actually asks for motor costs - fuel insurance etc, not 40p per mile, but it is much easier for you to use the mileage rate than the other, andis financially a good idea unless you drive a gas guzzling car or one that breaks down constantly.

You have to decide wehter to use the 40p per mile rate or the other. You cannot then change your mind and swap over next year unless you change your car. If you use the other system you need to keep a record of not just your business miles but all your personal miles as well so you can work out the proportion of business to personal. If (say) it was 1:3, then you would put the figures for one quarter of hte cost of insurance, petrol, breakdown, servicing etc etc in the worksheet. And then you get into depreciation too - for a small business just don't go there....!

Until you get more work I wouldn't try to claim office expenses. Apart from anything else until you are earning over about £100 a week you won't be paying tax anyway - unless you have another job....private income....or whatever. Concetnrate at this stage in working up your business, getting customers, marketing etc, but get into the habit of good record keeping now while you are small.

Good luck andhope was useful
Linda

firstinflight

Ok, i may be wrong here, but I was under the impression that the 40p per mile allowance was generally for employees, and that self-employed people were able to claim their motor costs directly as a trading expense (only the amount that relates to business mileage, obviously)

I guess it all hinges on whether the revenue would deem you to be employed or self employed. If self employed, you can probably also get a capital allowance on the cost of your car.

BoGoF

Self-employed people can use the 40p per business mile or the actual running costs. But once you select a method you cannot change this to suit.

evosy1978

ok so im reading this thread with interest.

how do you prove how many miles you have done on your tax return form or to the tax man if he knocks your door.

evo

Debt_Free_Chick

evosy1978 wrote: »

ok so im reading this thread with interest.

how do you prove how many miles you have done on your tax return form or to the tax man if he knocks your door.

evo

You keep a record. I do it in a table in Word, or Excel would work too.

Date, From (place where journey started), To (place where journey ended), Total mileage (for that journey) and the amount claimed for that journey (either the Function option in a Word table or a calculation in Excel).

Doubtless, if HMRC wanted you to give further proof, you would have other evidence too e.g. details of the work done for that customer; an invoice to that customer; perhaps other expenses incurred in the work for that customer.

LandyAndy

I am a partly self employed accountant. I use the 40p mileage allowance as a tax deductible cost of my business for all journeys from my house (doubles as my place of business) to my clients.

Remember it's only 40p for the first 10,000 miles in any tax year. After that it's 25p.

I also keep records similar to those noted by DFC.

Dave80s

Hi, I was looking for clarification on the 40p allowance and noticed this thread.

Can someone please tell me, when claiming the 40p allowance, does that include the purchasing/finance costs of the car? Or is the car a fixed asset of the business?

e.g. £12k car purchased, used half for business, half private = £6k
25% of £6k in the expenses column for a year = £1500

If doing 10,000 miles a year, would that mean you could claim £4000 or £5500?

I assume the 40p does include tax, mot, servicing, insurance, tyres etc.

Debt_Free_Chick

Dave80s wrote: »

Hi, I was looking for clarification on the 40p allowance and noticed this thread.

Can someone please tell me, when claiming the 40p allowance, does that include the purchasing/finance costs of the car? Or is the car a fixed asset of the business?

e.g. £12k car purchased, used half for business, half private = £6k
25% of £6k in the expenses column for a year = £1500

If doing 10,000 miles a year, would that mean you could claim £4000 or £5500?

I assume the 40p does include tax, mot, servicing, insurance, tyres etc.

Forgive me if I'm wrong, but you seem to be in a muddle. You claim EITHER the actual costs of running the vehicle (pro-rata, if used privately) OR you claim 40p per mile.

If claiming the mileage, then in your example, you would claim £4,000 (10,000 miles @ 40p). This is the only amount you can claim for business use of the vehicle.

If you're not claiming via the mileage allowance, then you can claim the actual cost to the business, for the (business) use of the vehicle ..... insurance, road tax, MOT, maintenance, fuel etc .... But you must be able to demonstrate the cost to the business. The mileage allowance cuts around this red tape and allows you reclaim 40p per mile, with no records, other than those that prove the business mileage.

The car is only a fixed asset of the business, if the business owns the vehicle. If you own the vehicle, but use if for business, then the car is not a fixed asset.

You refer to a tax allowance of 25%. Is this for capital allowances? If so, then you can claim capital allowances IF the business owns the car. But you can claim the fuel, maintenance and running costs in addition, as well.

The question is .... who owns the vehicle - you or the business?