Leased car & mileage allowance

awwallace22 Registered Posts: 35 Regular contributor ⭐
I have a senario and hope someone could clarify.

A self employed sole trader (not vat registered) uses a leased car for 80% business use 20% PU. He claims the 80% lease but no capital allowance. But can he claim his 8000 business miles using the mileage rate or will he need to claim his 80% fuel receipts, car insurance, RFL as an expense. I thought that the mileage allowance incorporated an element of capital allowance so Im not sure if he can claim the lease and mileage allowance together? :confused1:

Any feedback much appreciated.



  • Bloater
    Bloater Registered Posts: 19 New contributor 🐸
    One or The Other

    It's really a case of one or the other.

    Either they keep the leased car out of the business accounts altogether - ie don't claim any proportion of the lease payments or capital allowances. Then they could claim the 40p per mile (25p in excess of 10,000 miles).

    Or they put through the lease costs and any other motoring costs, fuel, tax etc, then disallow a reasonable percentage for private usage, with no claim for mileage.

    Once over the VAT registration limit, they can only use the second option, however, there is a restriction on the VAT which can be reclaimed on leased cars, which is limited to 50% (not an issue here, but included for completeness).


  • Gianni
    Gianni Registered Posts: 99 Regular contributor ⭐
    How have you worked out the 80% business use?

    To ascertain the private mileage usage it's probably best charging a mileage rate to all business miles and then offsetting this against the fuel cost incurred. The balance left over would be payable by the employee. Guideline mileage rates are available on HMRC's web site and if I remember rightly they seemed generous!
  • awwallace22
    awwallace22 Registered Posts: 35 Regular contributor ⭐

    Its just a hypathetical %. What I was trying to get at, can you claim the lease of the vehicle and the mileage rate or is it lease plus the fuel costs, insurance rfl etc.
  • deanshepherd
    deanshepherd Registered Posts: 1,809 Beyond epic contributor 🧙‍♂️
    Does anyone know when the 40p mileage rate was first introduced? It must have been very generous at the time, barely covers costs now I should think.
  • awwallace22
    awwallace22 Registered Posts: 35 Regular contributor ⭐
    I believe it was revamped back in 2002 and back then the fuel cost was roughly 69.9 per litre!!! Fuel alone has jumped by 47% , what about insurance that certainly hasnt gone down or RFL. I think its time the HMRC relooked at mileage rate, somehow I think we are more likely to see pigs fly than the rate change... Sorry deanshepherd you got me going on that one :(
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