Vehicle tax allowances.

[MickBrown]

I am just doing my first year accounts and I am looking at how to claim for vehicle expenses. I do about 15,000 miles P.A., if I claim for all expenses then that adds up to:

Fuel £2100
Tax/insurance/service/MOT £700
Mechanical faults (not had any yet but allowing for some) £500
Depreciation, van cost £3000 so probably around £600
So altogether around £3900, the tax man may also reduce this by around £500 for personal use.

If I claim for mileage, then 10000 miles at 40p per mile and 5000 miles at 20p per mile adds up to £5,000.
So claiming for mileage allowance seems to be a better option, in addition as I am only claiming for mileage I have done there is no reduction for personal use.

Can anybody see any flaws in my calculations?

 

[dontknowitall]

If the van has cost £3,900 to cover 15,000 miles then this is a cost of 26p per mile. It's not a cost of 26p per mile then another 14p profit per mile from the tax payer!

Always best to "employ" and accountant for business stuff as they can find other things you can claim. Did you know you can claim for using your home as an office? Or if your wife does some work for you then there's a salary that can give you both a more favourable tax advantage? Or that you can claim for clothing?

 

[leelister6]

Apparantly, we can still claim for a pint of milk a day! Summat to do with working with lead, dunno if it's right, just what I was told

 

[kirkgas]

the £5000 comes off your taxable amount so in effect you save 20% of the £5000, so you will still have spent what you spent, but the £0.40 per mile allowance is to cover running costs and wear and tear, but as suggested your accountant will advise on your individual requirements, i believe if mileage is under 18000 PA then it is best to use the 40/25p allowance, if over 18000 it is better to claim it via the actual costs with allowances taken off for personal use

 

[Paulus]

Your calculations lokk spot on to me Mick. I do the same sums every other year and the 40p/25p always works out in my favour.

Be careful about claiming for your home as an office, I'm pretty sure that part of the home then becomes business premises and can lead to all sorts of problems. I was advised not to do this when I started up by a business adviser.