Accounting For Business Vehicle Along With Personal Use?

[Foresty_Forest]

I'm about to purchase/lease a business vehicle for business use. I also intend to use it for personal as a 2nd family vehicle. How do I account for that? My initial forecast indicates that the cost of running the vehicle will be several £thousand/year. If I use the vehicle for personal use too, what would the IR expect to see on my tax return? Also, on occasion, If my business plan works I could make the business pay for some personal trips. For instance if I visit family on the other side of the country it should be possible to make this an authentic business trip that makes a profit-how would the IR view that?

 

[Newchodge]

I'm about to purchase/lease a business vehicle for business use. I also intend to use it for personal as a 2nd family vehicle. How do I account for that? My initial forecast indicates that the cost of running the vehicle will be several £thousand/year. If I use the vehicle for personal use too, what would the IR expect to see on my tax return? Also, on occasion, If my business plan works I could make the business pay for some personal trips. For instance if I visit family on the other side of the country it should be possible to make this an authentic business trip that makes a profit-how would the IR view that?

It makes a huge difference whether you are trading as a sole trader or as a ltd company. Also, by business vehicle, do you mean a car, or a van or a what, and what sort of fuel?

 

[Foresty_Forest]

Sole trader. Thanks

 

[Newchodge]

Sole trader. Thanks

Then you and the business are considerd a single entity. You either record all business mileage (miles claimed, purpose of visit, start and end locations) and claim 45p per mile as a business expense, using simplified expenses, or you keep the same record and look at apportioning all costs between personal and business.

Whether a personal trip can be claimed as a business expense would depend on whether the trip was a necessity for the business. Let's go to the Lake District so I can look in a camping shop and see how much they charge for work boots would not be a claimable trip!

 

[Foresty_Forest]

Thanks. Considering the current price of fuel, 45p/mile is well under the true cost of running a vehicle, surely?

 

[Newchodge]

Thanks. Considering the current price of fuel, 45p/mile is well under the true cost of running a vehicle, surely?

It is what HMRC allows. Any more and it becomes taxable.

 

[Foresty_Forest]

Just checking the HMRC website for info, it's not very clear to me. Do you mean that you either go for the simplified 45p/mile, or work out vehicle costs, but only up to 45p/mile?

 

[HFE Signs]

Thanks. Considering the current price of fuel, 45p/mile is well under the true cost of running a vehicle, surely?

45p/mile should easily cover the average car. Is it a V8 or something?

 

[Foresty_Forest]

It's a van. I'd rather work out the exact cost than be lazy and under claim. My initial sums (could be badly wrong of course lol), indicate a cost of anything between 40p and 65p/mile depending on number of miles driven-I haven't decided on vehicle yet either and that'll make a difference.

 

[Bob Morgan]

Many regard the HMRC figure of 45p Per Mile as a Maximum - It is NOT! Rates in excess of 45p incur tax. Incidentally, the HMRC figure has remained the same for over 10 Years.

 

[pentel]

45p/mile should easily cover the average car. Is it a V8 or something?

45p is to cover fuel, depreciation, maintenance, insurance, tax, mot, tyres etc and is paid for the first 10,000 miles. This is just about enough to run a small, very economical vehicle, provided you are very lucky with the deprciation.

 

[Newchodge]

Many regard the HMRC figure of 45p Per Mile as a Maximum - It is NOT! Rates in excess of 45p incur tax. Incidentally, the HMRC figure has remained the same for over 10 Years.

And the previous rate, 40p pe4r mile, was constant for about 15 years!

 

[Newchodge]

45p is to cover fuel, depreciation, maintenance, insurance, tax, mot, tyres etc and is paid for the first 10,000 miles. This is just about enough to run a small, very economical vehicle, provided you are very lucky with the deprciation.

The theory being that all fixed costs have been covered during the frst 10,000 miles per year(£2,000) and the running costs are 25p per mile.

 

[Foresty_Forest]

I don't get it? As a vehicle based business, I could be easily doing 20'000+ miles/year, total expenses easily higher than 45p/mile.

 

[Newchodge]

I don't get it? As a vehicle based business, I could be easily doing 20'000+ miles/year, total expenses easily higher than 45p/mile.

Are your running costs - fuel, tyres, maintenance more than 25p per mile?

 

[Foresty_Forest]

I know what I'm doing, I'm lumping in all the expenses as well as the vehicle costs...woops...

 

[Scalloway]

Just checking the HMRC website for info, it's not very clear to me. Do you mean that you either go for the simplified 45p/mile, or work out vehicle costs, but only up to 45p/mile?

You pick whichever is the most benficial. 45p per mile might be worthwhile if you just do a few business runs but if you are running, for example a delivery business, then use actual costs with a deduction for any private mileage.

 

[WaveJumper]

And lets hope HMRC are not interested in this forum otherwise I could see you sitting around the kitchen table explaining away all your invoices, regards certain travel arrangements ?

 

[JEREMY HAWKE]

I'm not sure where you are getting several thousand pounds a year in maintenance.
We run the highest milage vans in the country and I say 4K per year to cover maintance but that's based on 95 thousand miles a year! . Then we dont always spend that much some times you only need to change the oil and brakes on newer vans throughout the year
A new van or a late low milage one wont be costing you hardly anything as they only require servicing
One of my large vans will require a gear box this year and at 2.5K we wont still be hitting the 4 k a year that I budget for

@WaveJumper I think they do ,I'm sure they do
Hello HMRC forum readers ??

 

[Bob Morgan]

Hello HMRC forum readers ??

It's called 'Connect' and makes 'Connections' between all sorts of information. It is the reason why people advertising on Airbnb get a Knock on the Door!

 

[UK Contractor Accountant]

its a van!

how much family personal use are you actually going to do in your workhorse vehicle which is going to get caked up in mud, dirt with the interior used as a dumping ground for all manor of rubbish & work related paraphernalia.

HMRC allow incidental private use of vans without any adjustment necessary.