Private car in business usage

[blados]

Good morning everyone,

I have never asked question here, every single time before I was able to find answers on Google. Unfortunately I am stuck now.

I am providing IT support for home and small business as a sole trader and I am using my private car to do it. Here some questions related:
1. Do I need to fill/send any form to inform HMRC about that car issue (I want to claim some car costs as business expenses)?
2. Where can I find information about using private car for business purposes (what kind of costs can I claim, which one in 100%, which one in other value, etc.)?
3. Is there any difference between claiming car parking / fue l/ MOT / repairs / tax road disc / insurance for a 100% company car and private car used for business purposes?

I am not that kind of person who is looking for ready answers. If someone is keen to provide a source when those questions can be answered I will be more than grateful.

As I mentioned on the beginning, I have done a web research but I haven't found anything that wuold match my questions.

Cheers
Thomas

[Williams lester]

1. No
2. You can either claim 40p per business mile or apportion the use of the car between business and personal (e.g. 60/40 or 50/50) and claim the business percentage of all costs for use of the car.
3. A company car is totally different with a completely different set of rules and costs.

[blados]

Cheers Dave for fast response.

> 2. You can either claim 40p per business mile or apportion the use of the car between
> business and personal (e.g. 60/40 or 50/50) and claim the business percentage of all
> costs for use of the car.

If I get it right, the best way for me is to:
- keep mileage record sheet for all trips,
- calculate what mileage percentage is business related,
- claim that percentage of all car costs.

Thanks mate
Thomas

[Williams lester]

Yes, keep a mileage log. Work out the business miles percentage and apportion all costs by that percentage. When you do that also work out what a claim for 40p a mile works out at, as this may be more advantageous to you. If you have an accountant they should be able to do this for you.

[Maslins]

Agree with all Dave says, but bear in mind if you're doing a lot of miles, only the first 10,000/year are at 40p, any above that are only at 25p/mile.

[Williams lester]

Agree with all Dave says, but bear in mind if you're doing a lot of miles, only the first 10,000/year are at 40p, any above that are only at 25p/mile.

It is still very early...I forgot to add that bit in :p

[Zeno]

Also remember that you can only use the mileage method if your turnover is less than the VAT registration threshold (£67k currently). Bear in mind that this does not affect the mileage that you charge to customers though if any.

[UKSBD]

Which is the "mileage method"?

[Zeno]

Which is the "mileage method"?

Paying youself mileage at the approved rates rather than claiming running costs and capital allowances.

[Williams lester]

Also remember that you can only use the mileage method if your turnover is less than the VAT registration threshold (£67k currently). Bear in mind that this does not affect the mileage that you charge to customers though if any.

I have taken on a couple of clients recently who's previous accountants used the mileage method even though their turnover was well over the VAT threshold!

[UKSBD]

Sorry, I'm still not clear.
My turnover is above VAT threshold and all I do is log any business
mileage and assume I can claim 40p per mile, is that wrong?

Can I not claim if it is for a trip to one of my suppliers to pick up stock?
But I can claim if it is a trip to visit a client?

[Zeno]

Sorry, I'm still not clear.
My turnover is above VAT threshold and all I do is log any business
mileage and assume I can claim 40p per mile, is that wrong?

Can I not claim if it is for a trip to one of my suppliers to pick up stock?
But I can claim if it is a trip to visit a client?

I am afraid not. HMRC in it's infinite wisdom pegs the limit of sole traders to pay themself mileage at the VAT registration threshold (Nothing to do with VAT, it is just that this is seen as a convienient ceiling after which businesses are "all grown up" so to speak) and thereafter expect them to account for motor expenses in the traditional way of actual costs and capital allowances restricted for private use.

Now, when as business is accounting using actual costs, a common misconception seems to set in that they cannot charge their customers mileage any longer (if they do this). This is not the case as the mileage charge to the customer is a different issue. (The mileage to your customer is only a further explanation of your charges in the same way an hourly rate would be and is something that you have to agree with your customer).

[Maslins]

HMRC in it's infinite wisdom pegs the limit of sole traders to pay themself mileage at the VAT registration threshold (Nothing to do with VAT, it is just that this is seen as a convienient ceiling after which businesses are "all grown up" so to speak) and thereafter expect them to account for motor expenses in the traditional way of actual costs and capital allowances restricted for private use.

Is that true?! I've never heard that before.

[Zeno]

Wasn't making it up honest.

http://www.hmrc.gov.uk/manuals/bimmanual/BIM47701.htm

[UKSBD]

To be honest I'm getting more and more confused.
Every post I have seen before says we can claim 40p on any business
mileage, my accountant asks me for a business milage log and I just leave
it to him and he always says I can pay myself an ammount at the end of each year.

(just to add mine is a limited company not self employed, does that make a difference?)

[Zeno]

To be honest I'm getting more and more confused.
Every post I have seen before says we can claim 40p on any business
mileage, my accountant asks me for a business milage log and I just leave
it to him and he always says I can pay myself an ammount at the end of each year.

The mileage method for sole traders is more of an HMRC concession than anything else.

I admit, it is not a very well known restriction but I assure you that it does exist. (See the link)

[Zeno]

(just to add mine is a limited company not self employed, does that make a difference?)

Yes, this does indeed make a difference. As the director/employee of the business, the company pays you personally mileage for business miles driven in your own private car. Provided that this is at the approved rates then there is no tax consequence of this.

[Maslins]

Cheers for pointing that out Zeno, wasn't aware of it. I note it's from when you first use the vehicle which is kinda nice, so whilst you keep the crappy old Fiesta with cheap insurance/repairs you can continue to use the 40p/mile even after breaching the VAT thresshold...then when you replace it with a hummer you have to go to an actual cost basis. Probably works in the taxpayers favour in most instances.

[UKSBD]

Thanks,
sorry for confusing things, just read the OP and see he mentioned he is
a sole trader.

Still a bit confused after a quick read at the HMRC site.

This is a typical scenario:
I work from home, but have a client who likes to have a regular face to
face meeting (usually once a week)
His office is 9 miles away.
can I claim 40p a mile on the 18 miles to go and visit him, or would it be
classed as traveling to work?

[Zeno]

Thanks,
sorry for confusing things, just read the OP and see he mentioned he is
a sole trader.

Still a bit confused after a quick read at the HMRC site.

This is a typical scenario:
I work from home, but have a client who likes to have a regular face to
face meeting (usually once a week)
His office is 9 miles away.
can I claim 40p a mile on the 18 miles to go and visit him, or would it be
classed as traveling to work?

You are getting into a complicated area regarding temporary places of work etc.

The scenario you mentioned then yes, you can pay yourself the £7.20 (£0.40 x 18) as this was business mileage.

Travelling to work would be if you had an office in the next town where you could not claim cost of travelling there from your home as this would be ordinary commuting.