Mileage expenses

[mark_s]

Having just bought a car and made my first business-related journeys, I Googled fuel/mileage allowances and came up with this link. So using those figures, I came up with £143.10 for a 318 mile journey which cost me about £35 in diesel. Even taking wear and tear/etc into account, this just doesn't seem right? I just want to check I'm not missing anything obvious before I start submitting erroneous figures to HMRC!

[Hilary Watts]

It's not altogether clear if you are an employee using your own car for your employer's business - if so then the table you have linked to (or at least the up to date version of it) shows the rates at which your employer can pay you a mileage allowance before you have to pay tax and NI on it - see here.

 

If on the other hand you are running your own business then in you will need to show your actual costs for fuel and similar items in your accounts and depending on the extent to which you have used your car for your business, as opposed to private and pleasure purposes, you may be able to claim that a proportion of the annual running costs such as insurance (are you insured for business use?), road tax servicing and repairs etc. should be set off against your income in calculating your taxable profit.

[StevieR]

If you also start to factor the cost of your own time into the journey cost, then the figure you arrived at starts to look like a bargain for your employer/customer.

 

Steve

[Jivemaster]

This is one of those areas of business where your accountant should advise on what is acceptable to you, to the client and your employer and the tax man. However the cost of fuel is only a small part of the cost of motoring, I was going to guess at four times the fuel cost, to include consumables like tyres and oil, and fixed charges like tax and MOT and business insurance.

 

One method that may work for you is to log all miles and business miles and proportion all costs in that ratio. Unless you have a van you can't charge for ALL your costs as some will be assumed private use, big vans can be all business, medium vans can be either.

[mark_s]

It's not altogether clear if you are an employee using your own car for your employer's business - if so then the table you have linked to (or at least the up to date version of it) shows the rates at which your employer can pay you a mileage allowance before you have to pay tax and NI on it - see here.

 

If on the other hand you are running your own business then in you will need to show your actual costs for fuel and similar items in your accounts...

 

Sorry, referring to self-employment. According to HMRC (link), I can use a fixed mileage rate as long as no other motoring expenses are claimed for, and that I consistently use the same system.

 

 

One method that may work for you is to log all miles and business miles and proportion all costs in that ratio

 

I was going to specifically log all business journeys I make - start, end, distance, client and date - and use that to arrive at a figure using the fixed mileage rates, as that seems both less effort and more advantageous financially (after a quick back-of-proverbial-fag-packet calculation).

[paulears]

I do know what you mean - the HMRC mileage allowance appears to be good, but it also takes into account the depreciation that takes place because of these miles, and is pretty realistic when you work out that a new van can lose 25% of it's value in just two or three years. When I swapped my discovery for a transit, it was a good decision, and all the running costs, rather than a proportion, are legitimate expenses. In fact, the only time I got in trouble with HMRC was when my accountant claimed some car expenses and they didn't agree.

[Brian]

I own my car and pay all running costs personally. I then charge the business at the full HMRC approved rates and have been doing so for over 10 years with no problems with either my accountant or HMRC.

[Paul TC]

I own my car and pay all running costs personally. I then charge the business at the full HMRC approved rates and have been doing so for over 10 years with no problems with either my accountant or HMRC.

Followed same process when I was operating a business. No issues with HMRC. What you charge a client for travel is another matter. :)

[RichM]

I own my car and pay all running costs personally. I then charge the business at the full HMRC approved rates and have been doing so for over 10 years with no problems with either my accountant or HMRC.

 

Yep, same here.

[mark_s]

Brilliant, in that case I'll stop complaining and continue with what I'm doing :)

 

Thanks all for the help.

[Judge]

Just a word about that. Since I became a limited company I had to do this too and so for the last few years I have been claiming 45p per business mile on my company tax return. Thing is you are supposed to record every journey, so that you are not trying to claim for miles driven to the supermarket or your kids school, only legit miles.

But really, who has the time? Not me for sure so I have been estimating, and reckoned that 80% of my journeys were business related. My new accountant has said that if I ever get audited then HMRC will be all over me for that - its not acceptable in any way shape or form.

So, keep records is what I am saying. If you cant be bothered then do as I did and buy an automatic GPS tracker. Don't know if its cool to use this site as an advert for the company, but if anyone want to know then pm me.

[Andrew C]

So, keep records is what I am saying. If you cant be bothered then do as I did and buy an automatic GPS tracker. Don't know if its cool to use this site as an advert for the company, but if anyone want to know then pm me.

So long as it isn't your company making/selling the tracker, mention away!

[Brian]

...buy an automatic GPS tracker.

Or save a load of money and do what I do and use a £5 mileage log book and a 10p biro which both live in the car's door pocket. I bet I can write the mileage into the book quicker than you can stick the GPS to the windscreen.

[Judge]

http://www.milelogik.com/

 

There you go. We have bought two at around £80 each. It stays on and plugged in and records every journey automatically. Then, every month or so you just unplug it and connect to computer and sync it. All journeys are listed, You can then mark what they were and it will recognise frequent destinations such as home, airport, etc so it learns as it goes.

Brian, paper is certainly cheaper and fair play if you can keep it up. If you want an automatic method this seems to be the best. Small UK company, no subscription - it seems all good so far. I spent a long time looking for something like this. Tried a couple that used my phone GPS to do it, and they work - but you still have to remember to start and stop every time you drive, and it uses loads of battery as the GPS is always working.

 

edit - it is a legit business expense BTW!

[paulears]

A few years ago I had a tax inspection and it took nearly a year, start to finish. The fuel logbook was vital to prove dates and times - and in my own case, who the journey is for - as in me, or a client where I'd claimed from them a mileage allowance. The book depresses you by showing the fuel costs - and it's scary to see the ltrs vs pounds columns reverse - when fuel went over the pound/ltr. I also find it useful for keeping track of mpg.