Car Mileage

Sandy Dog
Sandy Dog MAAT, AAT Licensed Accountant Posts: 25 Dedicated contributor ? ? ?
I wondered if anyone knew the answer to this query.

A self-employed person uses a car for his business and because his business mileage is less than 10K he decides to claim tax relief at the miles per annum method. In his accounts does he leave out the asset value of his car and also the business miles expense thus inflating his net profit and then in his tax return claim tax relief at 45p per mile thus reducing the net profit that is taxable?

Comments

  • Monsoon
    Monsoon FMAAT, AAT Licensed Accountant Posts: 4,071 ? ? ?
    You add 45p per mile (40ppm 2010-11 and prior years) x miles in year as a Motor Expense in the accounts.

    You do not record the car itself as an asset in the accounts, nor do you claim any petrol or running costs.

    Just just show the mileage as an expense.
  • Sandy Dog
    Sandy Dog MAAT, AAT Licensed Accountant Posts: 25 Dedicated contributor ? ? ?
    Thanks

    Hi Monsoon

    Your answer was very helpful, thank you.

    I'm new to these forums, as you might have guessed. Is there some way of leaving some kind of feedback to show my gratitude?
  • mattaat
    mattaat Users Awaiting Email Confirmation Posts: 17 Dedicated contributor ? ? ?
    Im confused :S

    Why can't you record the car as a fixed asset because surely claiming 45p per mile as a motor expence could effectively just be Activity Depreciation on the asset?
  • PGM
    PGM Registered Posts: 1,954
    Monsoon wrote: »
    You add 45p per mile (40ppm 2010-11 and prior years) x miles in year as a Motor Expense in the accounts.

    You do not record the car itself as an asset in the accounts, nor do you claim any petrol or running costs.

    Just just show the mileage as an expense.

    Does it make any difference if you are a self employed builder with a van, still claim the 45p?
  • Monsoon
    Monsoon FMAAT, AAT Licensed Accountant Posts: 4,071 ? ? ?
    As long as your turnover is under the VAT threshold, you can use mileage instead of claiming capital allowances and all running costs apportioned for private use.

    I guess you can show the car/van as an asset and depreciate it (after all, depreciation doesn't affect tax) but on mileage-claim clients I don't bring the car into the accounts as an asset - as the 45p a mile route is a way of reimbusring an individual for business use of their private vehicle. If I was bringing the car in as an asset, I would want to see actual motor expenses as well.

    Though I don't see mileage claimed on vans so much (usually CAs and actual expenses are claimed) I probably would bring it into the accounts either way. I assume you can claim 45p a mile on a van, don't know offhand. I don't see why not.

    PS Trevor - no problem. There is a rep button on posts, but it's not much use. We are campaigning for a thanks button instead! ;)
  • PGM
    PGM Registered Posts: 1,954
    Thanks Monsoon, thats helpful
  • Paul C
    Paul C Registered Posts: 193 ? ? ?
    What would we do without Monsoon! This just came in very handy.
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