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Tax! Lovely tax!
Hello, happy new year.
People of the UK…..
I was pondering the whole self assessment tax return thing this morning. I am a sole trading self employed person and obviously don’t want to pay too much tax. My accountant has the books for 05/06 and isn’t around until the 8th of Jan. I was wondering (I was told but can’t remember) about the whole ‘motoring expenses’ aspect.
On my tax return bumpf it states that ‘mileage allowance’ can be claimed as long as no other motoring expenses are claimed. Does this mean that if I claim a mileage allowance then I can’t claim for servicing, m.o.t, road tax, replacement tyre cost, vehicle cost/value, body repair cost, wiper blades, oil, replacement parts cost, severn bridge tolls, etc, or does it simply mean that fuel receipts cannot be claimed for?
I hope somebody in the UK can give me a simple yes/no answer, I’m a b*gger for this sort of thing, it’ll drive me mad until I find out, can’t wait another minute and all that.
Thanks in advance,
Cheers
Gareth
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16 Replies
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sorry see below
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sorry I was logged in as Lynn,
As far as I see it a mileage allowance is the whole cost of the expense, and therefore includes rfl servicing depreciation etc. so you cant claim these charges separately, It just an easy way to calculate the costs, especially if you use a non commercial vehicle in your business.
Road tolls should be claimed for separately
I claim the actual costs and deprecation for my vehicle, less a percentage for personal use.
Peter
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I claim mileage and nothing else. It adds up to a tidy sum usually, and is a simple way of doing it. ie No records to keep etc.
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quote Andy Gorman:. ie No records to keep etc.Andy don’t you have to keep a record of your journeys? ie A-B = x miles
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for the last 5 years i have claimed EVERYTHING reguarding motoring expenses and that was after i was dragged in by the ir under investigation of climing things i should not of been so they say.
my vehicle i bought for use as a company veh so the ir said i could claim 100% of fuel,vah tax,depreation and monthly payments for the veh,insurance,servicing,repairs everything and anything reguarding the veh, the only sticking point with the ir was they didnt want to allow me 100% of fuel costs they said i must at some point be using it on private buisness but when i pointed out i had 2 other cars for that i was allowed to claim 100% of my fuel costs. if you use a veh for buisness ALL costs to run that veh are tax deductable. 😉 -
My accountant tells me that I shouldn’t have to worry about any records as it is rare for such low mileage to be questioned. However, a diary of mileage would cover this eventuality. Wouldn’t be much fun, writing down every journey though. I could soon manufacture a realistic summary of mileage done, if necessary.
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i dont mention milage and have never been asked about it, i just put all my fuel reciepts in and they just ok it.
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The current UK gov rate for mileage costs are 40p a mile and you can’t claim from your house to your work as that is considered personal use not business mileage.
As some of you know I work full time and get a car allowance each month and can claim back all fuel costs but if my private mileage cost is greater than my business mileage (at 40p a mile) i get taxed on it at 40% as I understand it. Maybe not relevant but a pointer anyway.
I have also found a sat nav program that will log all journeys and export to .csv Haven’t tried it yet but sounds promising as I have an IPAQ with Tom Tom 5 and want to try it.Goop
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Gareth, as you have probably already noticed, different people will give you different ideas about what you can and can’t claim for. Alan is maybe in a different position to a lot of us because he has a vehicle that he has convinced the tax man he uses solely for business. As he has 2 other vehicles then it is very easy to see why the tax man is prepared to believe that but most of us only have one car or van and the tax man will not believe that we use it exclusively for business. There has to be an element of personal use in there somewhere. I think your accountant is the best person to advise you as he will know your history and the best way for you to claim. I know different people claim different ways depending on circumstances like mileage etc.
I got myself into trouble a few years ago because I am disabled and I have a road tax exemption. Without knowing the rules I registered my van as disabled so I could save on the road tax and then got into trouble because I was not allowed to use a vehicle registered for a disabled person for business use even though I was the only person using the van as I worked on my own. I had to re-register the van and pay for road tax so I could run my business. -
Tax is a pain in the (!) and as you say gareth its also down to individual circumstances, when the ir dragged me in 18months ago they went through everything and the 1 thing i had done incorrectly was i claimed the monthly hp payments on the veh, you carnt do that unless its leased, because i had bought it it comes under capital gains so you claim depreation on the veh over the period you are paying hp for it, i think there was only about £20 difference a month in what i was claiming anyway so all was fine, but like the ir said if you use something soley for your buisness its tax deductable, i dont know where you are all getting this milage stuff from but iv never come across that before,apart from a milage claim do you claim for road tax/insurance/maintainance of your vehs or are you just claiming a % of all costs? If you only claim a % of costs its a bit like saying rent on your premises is £100 a week i only did 25hrs this week so i can only claim £50 of rent!!
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My accountant has the attitude that as long as you are paying the i.r something and not taking the p*ss, they are usually quite happy. He also suggests claiming a fixed amount each week i.e. £40 to allow for small percentages of clothing, food, cleaning, heating/lighting etc which I will use for business purposes whilst in the home (my office/workshop is a room at home). He is quite sure the i.r are happy with this sort of thing without the need for receipt keeping every time you shop in Tesco or M&S for example. I’m showing initiative, he tells me, and I will pay the i.r. more tax as a result of being self employed than if I was employed so they (according to him) allow this sort of thing. I think it’s called discretion. I hope he’s right.
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I would say most accountants are pretty helpfull and you are paying them to help you pay LESS TAX, where does he get this being self employed you will pay MORE! i wasnt happy with the amount of tax i was paying a couple of years ago so got rid of the accountant and went straight to the ir and got them to sort it out at no cost where the accountand was getting £400+ a year and i saved over 30% in tax payments! dont just use the 1st accountant you come across ask other people who use them and you will get some horror stories and some good ones. at the end of the day tax is a minefield 😕
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Alan,
You never knew my ex-boss then. Not the best payer of wages ever. So as I was earning quite a poor wage, I was paying a tiny amount of tax. Now, of course I’m earning LOADS more than then (I wish) so I am paying comparatively more tax than when I was employed.
As this is my first tax year, I’ll go with this accountant (who was recommended by a saintly person) and once I’ve had time etc I’ll be brave enough and knowledgeable enough (from posting on this forum etc) to go it alone!
This time next year……
Gareth.
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Gareth, it may be true that you are now earning more than you did when you worked for someone else but you also have expenses that you didn’t have when you worked for someone else, don’t forget all the equipment and tools you have had to buy, these are business expenses and should be taken off before any tax is paid so make sure your accountant has all the info he needs about items you have had to buy for your business to operate, not just vinyl and substrates. I thought a business was exempt from tax in its first year but that might have all changed or may just apply to limited companys.
As for expenses as you seem to be operating from home, don’t know how things work for signmakers but my ex-wife is a childminder and there are set amounts that she can claim against things like heating and lighting, wear and tear etc and these were a persentage of the overal cost. -
Martin,
I even keep receipts for bin bags! I think I’ve thought of everything.
I heard this ‘nobody pays tax in their first year’ before but I now think it’s either because you probably make such a tiny profit what with all the setup costs you don’t actually get over your tax free amount, or that the first year’s tax isn’t actually paid until 6-8 weeks before the end of the 2nd year (apr 05-mar 06 accounts payable in jan/feb 07).
Cheers
Gareth
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I’ve been told that most companies don’t pay tax in the first 3 years of trading, this works out about right for me as I fear I’ll be paying tax for this year 🙁
However this was only a general average not the tax rules, as far as I know you pay tax however long you have been trading be it 1 day or 50 years.As to the mileage you can use 2 ways.
1st is 40p mile, this is business mileage, you are supposed to keep a record but it will rarely be asked for.
Or you keep every bill for the vehicle and keep a record of the business mileage.
You then work out the percentage of business mileage to total mileage and this is the percentage of the bills for the vehicle you claim.
The purchase price is a capital cost and the claimable amounts vary from year to year so you’ll have to ask about that.I use 40p/mile it works out very well with general usage.
Steve
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