Motoring Expenses

In one of my recent Blogs – “Business Expenses for the Self Employed – An Overview”, we discussed the all-important  “wholly and exclusively” and “duality of purpose” rules.   Always bear these in mind when thinking about business expenses.  It is especially pertinent when considering motoring expenses and specifically using your private vehicle to assist with your business.

What exactly can I claim for?

If you use your private car to help with your business, you can either claim a proportion of the running costs eg fuel, oil servicing – using a ratio of your business mileage to total mileage – or you can claim a mileage allowance (set by HMRC).  If you choose the former, you must keep a record (receipts) of all costs incurred (including original purchase cost for capital allowances purposes) and for either method you need to keep a record of all business journeys undertaken.

What are the current mileage rates?

Cars and Vans (up to 10,000 miles)                           45p

Cars and Vans 10,000+ miles)                                   25p

Motorcycles                                                                 24p

Bicycles                                                                       20p

Can I claim for all journeys that are business-related?

No.  Not all journeys undertaken in the course of your business can be classed as business miles.  This area can be complex and I can only provide a flavour in this blog but I hope the following examples are useful:

Where a sub-contractor works at one or two different sites during the course of a year, these will become his normal working place over that period and are hence classed as business ‘bases’ – for tax purposes they are regarded as ‘normal commuting’ and are not allowable.

Where a businessman has his base at home, for example a salesman and spends his weeks travelling to different clients, the business mileage will be allowable as these locations can only be regarded as temporary.

Where someone has a buy to let property in a neighbouring town and occasionally attends the property whilst also doing the weekly shop, the journey has a dual purpose; the purpose in making the journey is not exclusively a business one and hence is not allowable.

If you are unsure what to do for the best, why not give us a call and we would be happy to help.

October 2015