Q & A with Martin Copland of Ashdown Hurrey

Martin Copland
Martin Copland

My accountant tells me that as a self-employed person, the rules on claiming motor expenses are more complex than they used to be. Is this correct?

Question

My accountant tells me that as a self-employed person, the rules on claiming motor expenses are more complex than they used to be. Is this correct?

Answer

Motor expenses for the self-employed can be claimed on two bases: either actual or mileage.

Actual motor expenses, as the description suggests, are the actual costs of running your vehicle for your business; therefore, fuel, repairs, insurance, tax, etc. can all be set against your income. However, the private element of motor costs cannot be claimed. You therefore need to calculate the proportion of costs which are for business and only claim this amount. For example, one method of calculating the business proportion may be by keeping a record of private or business mileage, whichever is easiest, and working out the business element as a proportion of the total miles travelled in the vehicle. Alternatively, the number of days the vehicle is used for business may be easier and accurate in some cases

HMRC could seek to question the size of the business proportion and ask you to justify this.

As an alternative, you can claim for the business miles travelled. Thus, if you drive fewer than 10,000 business miles per year you can claim 45p for every mile. Business miles over 10,000 attract an allowance of 25p per mile. This scheme means that you do not need to retain all your motor expense receipts and try to justify the business element. You need only keep a log of the business miles travelled and submit a claim.

The main thing that you need to be aware of if using the mileage based scheme, is that you cannot claim capital allowances for your vehicle if mileage has been claimed. This is because the mileage figures (45p and 25p) include an allowance for wear and tear of your vehicle, which is also included in the capital allowances.

Advice

If you would like to discuss your circumstances in greater detail, Ashdown Hurrey can advise on this matter in addition to other tax, accountancy and business matters. Contact Martin Copland on 01424 720222 or email him at martinc@ashdownhurrey.co.uk.

The self-assessment filing deadline is fast approaching. If you haven’t filed your self-assessment tax return yet and would like a free consultation to find out how we can assist, please get in touch.