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#1 20-04-06 11:24:26

GRACEMAE
Verified Member
Registered: 13-05-05
Posts: 3

mileage allowance

hi,
Could anyone confirm  that I am correct in thinking, a mileage allowance can only be claimed on a self assessment return if a capital allowance for your car is not being claimed?
Also if the car is rented/leased can a mileage allowance be claimed?
Thanks in advance for any help/replies.
Cheers smile

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20-04-06 11:24:26

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Re: mileage allowance



#2 20-04-06 12:41:19

Django
Guest

Re: mileage allowance

Er dunno,

But I lease a car and claim 100% fuel as I don't ever use it unless I'm working. I have spoke to the tax office and they are quite happy with it.

#3 20-04-06 17:08:22

Panjandrumbuilder
Guest

Re: mileage allowance

When you say mileage allowance, do you mean fuel costs? If you own the vehicle or are buying it on HP, you can claim 40% capital allowance in the first year, thereafter it's 25% of the previous year's depreciated value. You should reduce your capital allowance claim by a reasonable sum to account for private use.

Same goes for fuel. If you use your car privately, you should pick a percentage that represents your private use. I always used 10% and the taxman was happy with that, i.e., I claimed 90% of my fuel costs against my earnings.

If you lease your car, the capital allowances belong to the leasing company, but you still claim for your fuel as above. Don't forget to claim the interest element of your finance costs if you are buying a car on HP.

Hope this helps


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#4 30-04-06 17:19:25

la.monikita
Verified Member
From: SE LONDON / KENT
Registered: 12-03-05
Posts: 3,064

Re: mileage allowance

silly question, but when you give all the paperwork to your accountant, do you put in all your fuel receipts in or leave the 10% out?

and do you notify them of your mileage? am currently, (for the last tax year) with TIC accountants, they are asking to write down the mileage as well so they can work out how much i use the car for private use.

also, if i use the car lot for private use and the advertising is still on it, could the fuel be classed as advertising costs?

how do you work out your private use? say i have worked 30h, but used double the fuel, what happens?
i taught my son last year and clocked up a lot of miles as he lives 40miles away. not sure how to calculate that neutral.

what's the average fuel people use per lesson? and what is allowed by the taxman?

sorry 4 so many questions


"What is necessary to change a person is to change his awareness of himself."
Abraham Maslow

21st Century Women http://www.loisontheloose.com/my-advent … /the-team/

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#5 01-05-06 10:15:02

Panjandrumbuilder
Guest

Re: mileage allowance

1. Put in all your fuel receipts.
2. The Inland Revenue have a rough method of calculating fuel usage based upon your declared earnings. If you want to avoid any problems with the Revenue, it is a good idea to make a note of your start and finish mileage across your working day. If you do this, you needn't make a note of your private mileage as your working mileage will be a percentage of your total mileage in the financial year. (assuming you noted your year-end mileage from the previous year, or your starting mileage in the new year).
3. It's an interesting point, i.e., claiming fuel costs as an advertising expenditure. I very much doubt that the Revenue would allow that. Good creative thinking though.
4. Your private mileage and therefore your private fuel usage is your total mileage in the year minus your working mileage. Don't worry about it on a day to day basis, as long as you're logging your working mileage per day, anything over that cumulative figure at the end of the financial year is your private mileage.
5. Average fuel used per lesson depends upon average mileage per lesson. In the ADI Business Modelleing tool I used 14 miles per lesson as a default value, based upon my own business. If you assess your average miles per lesson, you can use my 'Speed' tool to work out your average fuel cost per lesson, but this will vary a bit, based upon current fuel prices. Don't forget to enter your vehicles average MPG into the tool to get an accurate reading. The default value is 49mpg, based upon my own car.
Hope this helps.
smile

#6 01-05-06 12:07:17

la.monikita
Verified Member
From: SE LONDON / KENT
Registered: 12-03-05
Posts: 3,064

Re: mileage allowance

thanks very much, very helpful.
i have tried your tool and think it's great.
i wonder how my next accountant will work everything out, when i give him diary pages with receipts, in a shoe box  roll.
he never said anything about writing down mileage  neutral, although on every fuel receipt i have, i wrote the mileage, i have no idea how much private use i have had (very time consuming). i suppose i just work out average per lesson then x number of lessons, then will know what the private use is.


"What is necessary to change a person is to change his awareness of himself."
Abraham Maslow

21st Century Women http://www.loisontheloose.com/my-advent … /the-team/

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#7 01-05-06 12:24:00

Panjandrumbuilder
Guest

Re: mileage allowance

Absolutely right. Knowing what your business usage is will definitely throw up a value for your private use, so don't worry about it.
Remember, your private usage percentage will also apply to either the capital allowance for your car if you own or are buying your own car, or to the amount of car lease payments you can claim if you are leasing. Your accountant will work this out for you.

Glad you found the tools to be useful.

TTFN   smile

#8 03-05-06 13:04:22

New Girl
Verified Member
From: Somerset
Registered: 25-07-05
Posts: 524

Re: mileage allowance

Um....Capitol allowance....is that the depreciation of the value of the car?  I dont get that bit at all.  I get the mileage now!  Harah!  But What do you actually log in your accounts for the depreciation?

Also, I know you can  claim a percentage of your house bills if you use a spare room as an office etc.  How on earth do you calculate that?  And how do you log it on your accounts?

This stuff is mind boggling!

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#9 03-05-06 13:28:39

Panjandrumbuilder
Guest

Re: mileage allowance

Capital allowance is the depreciation element of your car. If you own your car, or are buying it on HP you can claim 40% of it's value in the first year, thereafter it's 25% of the previous year's depreciated value. Some vehicles having very low emissions actually attract 100% capital allowance in the first year. You don't account for capital allowances in your main accounts, because those accounts deal with revenue items, i.e., income and expenditure items.

When you are preparing to do your accounts for submission to the Revenue, either online or on paper, one of the first things that they ask is - are you claiming any capital allowances? That's the only place you need to put in a figure as calculated above.

Your spare room/bills depends on a few factors, i.e., number of rooms in the house, annual gas/electricity bills etc. There is a calculator for this on the Tax Buddies website which will work out the figure for you. My household figure worked-out at £114.00 - not a lot, but worth having. Account for this value under admin in your accounts. Hope this helps.  smile

#10 08-05-06 19:37:49

New Girl
Verified Member
From: Somerset
Registered: 25-07-05
Posts: 524

Re: mileage allowance

Thanks for the advice.....I finally feel as if I'm getting to grips with this accounts lark. 

I'ved used the calculator on Tax Buddies as advised.  Is the figure they give you per day/week/month or what?

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#11 09-05-06 05:34:14

Panjandrumbuilder
Guest

Re: mileage allowance

It's per year. smile

#12 09-05-06 06:30:45

New Girl
Verified Member
From: Somerset
Registered: 25-07-05
Posts: 524

Re: mileage allowance

Thanks.  I think I will be better off using the £2 per week that the IR allow without having to justify the figure.

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#13 13-05-06 15:51:31

GRACEMAE
Verified Member
Registered: 13-05-05
Posts: 3

Re: mileage allowance

I was told by the tax office that you could claim 25% in the first year and 25%  of the balance for the next 3 years.The maximum purchase value of the car has to be £12,000.

Hope this makes sense. neutral

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#14 13-05-06 16:55:05

jr
Verified Member
Registered: 29-10-05
Posts: 79

Re: mileage allowance

I think the original poster was asking about claiming mileage allowance as opposed to claiming for all the expenses for the car.
There are two ways you can claim expenses if you own your vehicle or are purchasing as opposed to leasing or if the car is supplied under a franchise agreement.
Claim for all items to do with running your car, insurance, servicing, repairs etc. etc. and the cost of purchase or
Claim 40p per mile for the first 10,000 miles and 25p per mile thereafter. For most people this would normally be the most tax efficient way.
The other point to remember is that you can not change from one to the other each year. You can only change in the year you change your vehicle.
John

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#15 14-05-06 10:08:07

Panjandrumbuilder
Guest

Re: mileage allowance

Hello Gracemae and jr,

On the subject of vehicles costing less than £12000 new, and the capital allowances allowable on them, please see my Capital Allowances calculator on the dtol website which you can view/download at www.dtol.co.uk - just follow the ADI area link.

With regard to claiming mileage allowances, I don't understand why you would want to as a self-employed person with your own, or even a leased vehicle. I'd be grateful if you could point me in the direction of the tax rules on this. 

#16 15-05-06 09:26:29

jr
Verified Member
Registered: 29-10-05
Posts: 79

Re: mileage allowance

Hi Panjandrumbuilder,
If you own your vehicle or are paying for it on credit you have two options regarding how you claim for it for tax purposes.
First way is to claim all expenses to do with running your vehicle, fuel, insurance, road tax, repairs, depreciation etc. Work out how much all this comes to in a year.
The second way is to claim mileage. 0.40p per mile for the first 10,000miles and 25p per mile for every mile after the first 10,000.
If you do say 30,000 miles per year you would claim 10,000 x 0.40p = £4,000.00 plus 20,000 miles at 0.25p = £5,000.00. Total claimed £9,000.00. Obviously you can't claim for any motoring expenses on top of this. For most people this usually works out better than claiming everything for the car. The way you do it is total mileage less private use, the tax man usually accepts 10% and work it out from there.
The other important point is that you can not change from one system to the other each year. You can only change in the year you change your vehicle. You can still claim interest if you purchased the vehicle on credit.
John

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#17 15-05-06 17:14:20

Panjandrumbuilder
Guest

Re: mileage allowance

Hi John,

Many thanks for your explanation. Is this written down somewhere official, as if it's correct, it's almost 50% more tax efficient than claiming first year's allowance plus fuel costs? Sounds more like a mileage claim scheme for an employed person who uses his/her car on company business.

#18 15-05-06 17:34:57

jr
Verified Member
Registered: 29-10-05
Posts: 79

Re: mileage allowance

I changed accountants 3 years ago and it was at this time that my new accountant changed to mileage. My only criticism of my new accountant is that he will not let you get away with anything.   :-[ I know of other ADI's who also claim mileage. Sorry but I don't know where it is written down.
John

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#19 16-05-06 17:26:43

Panjandrumbuilder
Guest

Re: mileage allowance

That clears it up then. The original post referred to self-assessment, not to using an accountant to file your tax return. However, having mentioned the 'a' word, I thought it might be useful to run some comparable numbers, as between mileage allowance as described above, and capital allowance, to see what benefits might be had choosing one over the other.

If you think about it, the more business miles that you do using mileage allowance, the greater the potential benefit. However, to have a total mileage of around 30k and therefore a business mileage of 27k, you would be doing around 1687 one hour lessons per year. At an average lesson price of £20.00 per hour, that would put you in the £33740.00 per year gross earnings bracket. At this mileage level, you would be £1503.00 better off than using capital allowances plus.

If you run the same numbers at the 1450 lessons per year rate, which is 'nicely busy' without overdoing it, that produces a gross income of £29000. The mileage to achieve this is 23.2k and the mileage allowance benefit over capital allowances plus is £887.00.

At the 1125 lessons per year rate, which is perhaps more typical still, that produces a gross income of £22500.00. The mileage to achieve this is 18k and the mileage allowance benefit over capital allowances plus is only £395.

I should point-out that, to work-out the above figures, I assumed that the car was bought new and I used the first year's allowance (FYA) at 40%. In the 'plus' bit I included fuel, insurance, tax disc and finance charges to buy the vehicle. I didn't include car servicing costs as these would normally be part of the 'buy me' deal.

Where use of mileage allowance over capital allowance plus would really come into its own would be in the second and subsequent years of car ownership, when the write-down allowance (WDA) is reduced to 25%.

If the mileage allowance scheme is legal, the savings made at the mileage levels quoted above would be sufficient to pay your accountant's fees which would themselves be tax deductible. That said, in the first year, unless you really are doing big business mileage, the two schemes appear to be somewhere in the region of tax neutral.


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