Help re mileage please

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Sarah-Lou
Sarah-Lou Registered Posts: 141 Dedicated contributor 🦉
I have a client who is a self employed counsellor. She bills the charity for her hours and they pay as per any company would. She also gets paid 35p a mile for her mileage when seeing clients.

She also has to attend meetings that she doesn't get paid mileage for and also has car expenses ie insurance, breakdown cover and upkeep of car).

My questions is because she gets paid a mileage allowance does she have to claim mileage allowance (rather than putting all her car expense through and claiming a percentage) for her meeting miles etc that she doesn't get an allowance for (I hope this is making sense!).

I know HMRC state that it is one or the other for claiming but I wasn't sure how this would work for this situation.

Thanks

Sarah-Lou

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  • Anne Boleyn
    Anne Boleyn Registered Posts: 196 Dedicated contributor 🦉
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    Mileage

    Hi Sarah-Lou

    I don't know the aswer but my gut feeling is that the mileage included on her invoices becomes part of her turnover and she can then chose her method of claiming as per anyone else. I've not come across this and would be interested in others views.
  • wildgoose1uk
    wildgoose1uk Registered Posts: 200 Dedicated contributor 🦉
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    Off the top of my head (and it had been a while since I looked at it!) the HMRC mileage rate if 45p for the first 10,000 miles and 25p thereafter. Assuming she does less than 10,000 business miles a year then I do not see any profit element in the mileage on the invoices and it could probably be treated as disbursements like those that appear on solicitors bills.

    Further I would think that she could claim the extra 10p per mile she is not getting from the clients on her tax return.

    I would encourage your friend to stick with the mileage allowance and not to go down the road (sic!) of putting through the repairs, running costs etc and claiming a percentage. Claiming the mileage is quick and easy and safe. Claiming the expenses is not so simple if there is private use of the car too.
  • reader
    reader Registered Posts: 1,037 Beyond epic contributor 🧙‍♂️
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    I'm only a level 4 student so don't take my comments, below, too seriously but:

    I always thought that the 45p per business mile related to an employer reimbursing their employee.

    Given that the client is self employed I would have thought that you would have to enter in all her vehicle running costs (e.g. fuel, repairs, insurance, etc) into the P&L and then add back a proportion for private use on the tax comp. Am I right?

    If the charities pay your client 35p / business mile that's not a problem, but I don't think a self-employed person can enter in motor expenses in their accounts via the approved mileage allowance payment scheme (i.e. 45p / mile from April 2011). Is this right?
  • Bluewednesday
    Bluewednesday Registered Posts: 1,624 Beyond epic contributor 🧙‍♂️
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    No self employed people can claim the mileage allowance as opposed to vehicle expenses as long as their turnover is below the VAT registration limit.

    http://www.hmrc.gov.uk/manuals/bimmanual/bim47701.htm
  • reader
    reader Registered Posts: 1,037 Beyond epic contributor 🧙‍♂️
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    Thanks for that Blue Wednesday; I learn something new every time I log onto this forum, it's great
  • payrollpro
    payrollpro Registered Posts: 427 Dedicated contributor 🦉
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    Ann Boleyn is right, the two transactions are completely separate. The client claims what they can from their client and this forms part of the turnover of the business. For example if she was VAT registered she would add the travel claim to the labour charge and add VAT to the total. That indicates it is the business charging the customer.

    The manner in which she reimburses herself for the cost of the journey is a separate matter and she has to decide if she is going to charge the costs of the vehicle, or a proportion of those costs, or to use a rate per mile. Even with the self employed HMRC accepts 45/25p a mile if that is all the person charges in the accounts and doesn't squeeze through the odd repair bill as well.

    What she could do is charge the client 35p, or nil if it is an all inclusive fee, but then reimburse herself 45p a mile from the business. The profit charged to tax is the turnover, less allowable costs, so it makes sense.

    Payrollpro
  • PGM
    PGM Registered Posts: 1,954 Beyond epic contributor 🧙‍♂️
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    payrollpro wrote: »
    Ann Boleyn is right, the two transactions are completely separate. The client claims what they can from their client and this forms part of the turnover of the business. For example if she was VAT registered she would add the travel claim to the labour charge and add VAT to the total. That indicates it is the business charging the customer.

    The manner in which she reimburses herself for the cost of the journey is a separate matter and she has to decide if she is going to charge the costs of the vehicle, or a proportion of those costs, or to use a rate per mile. Even with the self employed HMRC accepts 45/25p a mile if that is all the person charges in the accounts and doesn't squeeze through the odd repair bill as well.

    What she could do is charge the client 35p, or nil if it is an all inclusive fee, but then reimburse herself 45p a mile from the business. The profit charged to tax is the turnover, less allowable costs, so it makes sense.

    Payrollpro

    I agree, they're two seperate transactions.

    Charges for mileage to clients is income like any other income.

    Then you claim the mileage tax relief on your tax return.
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