Tax relief on using own car for business purposes?

**Maslins** · 15 April 2013, 13:26

Originally posted by gatersUK View Post

Hi there; can someone advise me on my circumstances? I'm a Ltd Company director; I'm claiming mileage/fuel through my expenses but haven't claimed any relief on using my own car. This is my second year trading and I am quite surprised HMRC didn't pick up on this after I submitted my first year accounts; if I am claiming mileage/fuel I'm wondering why they wouldn't have questioned what the fuel was going into?
I was discussing my company with an ex-colleague over the weekend and he seemed to think I should be claiming depreciation of my vehicle, cost of servicing, tyres etc?
I'm not too sure and my accountant is on holiday (again!!!)

Assuming by mileage you mean the 45p/mile, then that's all you can claim. Theory being the actual fuel cost is only maybe 15p (varies a lot depending upon mpg etc) so the "profit" on each mile contributes towards depreciation, insurance, servicing etc etc.

Ltd Co directors can't apportion costs like sole traders can. It's either a company car (whole new can of worms) or it's your private car and you reclaim mileage.

I'd suggest in the current year you reverse out the fuel costs you put through in year 1. Doesn't surprise me HMRC didn't spot it. It's self assessment, your responsibility to put in accurate figures. They'll look into some, especially where figures look odd, but only the whole they accept what you provide as factual. Them not questioning it doesn't mean they've agreed your figures are spot on, or that you shouldn't correct the mistake.

**northernladuk** · 15 April 2013, 13:28

Why would the company pay the servicing costs and depreciation of your personal car??? You claim the 45p per mile which covers all of these. Nothing else you can do. It is a personal car.

You could look in to your company buying it but you will get heavily stung for Benefit In Kind as it is available for personal use so just isn't worth it.

Use the search function as described in the link below and search for 'company car' or something like that. We have gone over company car benefits many times. In a nutshell claim your 45/25p and that is it else buy a company car in which case you are likely to be worse off unless it is super low on emissions. The links you will find will explain.

http://forums.contractoruk.com/welco...uk-forums.html

**northernladuk** · 15 April 2013, 13:28

Don't forget about the 24 month rule though... As soon as you know you are working in the same geographic area for 24 months you can no longer claim mileage.

**gatersUK** · 15 April 2013, 13:29

Originally posted by Maslins View Post

Assuming by mileage you mean the 45p/mile, then that's all you can claim. Theory being the actual fuel cost is only maybe 15p (varies a lot depending upon mpg etc) so the "profit" on each mile contributes towards depreciation, insurance, servicing etc etc.

Ltd Co directors can't apportion costs like sole traders can. It's either a company car (whole new can of worms) or it's your private car and you reclaim mileage.

I'd suggest in the current year you reverse out the fuel costs you put through in year 1. Doesn't surprise me HMRC didn't spot it. It's self assessment, your responsibility to put in accurate figures. They'll look into some, especially where figures look odd, but only the whole they accept what you provide as factual. Them not questioning it doesn't mean they've agreed your figures are spot on, or that you shouldn't correct the mistake.

That makes sense, many thanks for the advice and direction. Forearmed is forewarned, at least I can go back and put him straight!!
Thanks again, much obliged to you sir....

**gatersUK** · 15 April 2013, 13:32

Originally posted by northernladuk View Post

Don't forget about the 24 month rule though... As soon as you know you are working in the same geographic area for 24 months you can no longer claim mileage.

Can you enlarge on the meaning of same geographic area? My contract covers SW Eng and S Wales!

**northernladuk** · 15 April 2013, 13:51

Originally posted by gatersUK View Post

Can you enlarge on the meaning of same geographic area? My contract covers SW Eng and S Wales!

Jury is out on that but the specific examples provided by HMRC mention the City of London. I would guess it to be across a major city or metropolitan region. The journey has to be substantially different.

**LisaContractorUmbrella** · 15 April 2013, 15:39

Originally posted by northernladuk View Post

Jury is out on that but the specific examples provided by HMRC mention the City of London. I would guess it to be across a major city or metropolitan region. The journey has to be substantially different.

Then you have to factor in the 40% rule, just to make life more difficult

Tax relief on using own car for business purposes?