Driving Instructor help please

Blonde Accountant

Hi all, I have just taken on a driving instructor. He has a list of all the percentages etc that he can claim-he went to a tax seminar-but I just wonder could anyone confirm if they are correct as I have been looking all over the HMRC site and I can't find anything.

Phone landline pu 20%
Mobile pu 90%
Internet pu 90%
Motor pu 10%
He puts in gas and Elec @ £40 and £30 pm
Mort p/ment-it is a proportion-based on a i/only mortgage-3 bed/2 family rooms therefore 201.72/5=40.34 1/2 room used as office area=40.34/2=20.17pm

Any help gratefully received

Thanks

Nicola

groundy

The private use calculations are not set amounts but are based on how much actual private use there is of an expense. For example they may have two mobile phone with one being purely for business and therefore 100% allowable. Likewise with the vehicle costs, if there is a second vehicle in the household then there may be no private use of the driving instructor vehicle.

I would not allow any home expenses as the work of a driving instructor is carried out in the car and not at the home. However I would allow £3 per week for use of home as office for preparing his books at home.

Please do not pay too much attention to things said on a HMRC seminar as they tend to lean heavily to whats best for HMRC without being clear on all your options.

Monsoon

What groundy said.

PGM

groundy wrote: »

I would not allow any home expenses as the work of a driving instructor is carried out in the car and not at the home. However I would allow £3 per week for use of home as office for preparing his books at home.

How did you arrive at the £3?

groundy

PGM wrote: »

How did you arrive at the £3?

This is the HMRC amount allowed for use of home as office

PGM

groundy wrote: »

This is the HMRC amount allowed for use of home as office

Ah right, interesting to know!

Do you X by 52 for the year, or deduct weeks you are on holiday?

groundy

PGM wrote: »

Do you X by 52 for the year, or deduct weeks you are on holiday?

I usually allow for 52 weeks and never had a problem with HMRC

PGM

Thanks Groundy.

mc25

I second groundy too.

Blonde Accountant

Thanks guys-great help x

Blonde Accountant

I just thought of another-when considering whether claiming for mileage costs or fuel and motor etc, if I claim mileage costs can I also claim the cost of leasing the car or not?

Thanks

jamesm96

Blonde Accountant wrote: »

I just thought of another-when considering whether claiming for mileage costs or fuel and motor etc, if I claim mileage costs can I also claim the cost of leasing the car or not?

Thanks

Unfortunately, no. The way I explain it to clients is that you can either claim the actual cost of buying, owning and running the vehicle (leasing / interest costs, Capital Allowances, fuel, servicing... etc) OR you can claim the mileage rate (which is designed to allow for all of the aforementioned expenses). If you claim mileage then that's all you can claim. That said, I don't think I've ever known for a client to be disadvantaged by claiming mileage rather than actual costs.

jamesm96

Just on the 'use of home' issue... I thought I'd seen some guidance from HMRC saying that they don't like flat-rate allowances, and that they would prefer that you calculate the actual costs of running the home, and take an appropriate apportionment based on the amount of your home (both size and time related) that you use in the running of your business; although a driving instructor carries out his fee-earning on the road, he (or she?) will certainly be doing plenty of admin at home! Does anyone else calculate use of home this way?

JodieR

jamesm96 wrote: »

I thought I'd seen some guidance from HMRC saying that they don't like flat-rate allowances, and that they would prefer that you calculate the actual costs of running the home,

have a look here http://www.hmrc.gov.uk/manuals/bimmanual/bim47825.htm - although it may not cover every scenario it does give a good general idea. I've got several driving instructor clients and think that they all fit neatly into 'Example One' and therefore claim the fixed rate (previously £2, now £3 per week)

PGM

JodieR wrote: »

have a look here http://www.hmrc.gov.uk/manuals/bimmanual/bim47825.htm - although it may not cover every scenario it does give a good general idea. I've got several driving instructor clients and think that they all fit neatly into 'Example One' and therefore claim the fixed rate (previously £2, now £3 per week)

I'm going with that for my electrician client. Although the example says "uses a room solely for business use for a short period each week".

Could that be a living room, that you do you books in? Or does it have to be some other room set up as an office type area.

jamesm96

JodieR wrote: »

have a look here http://www.hmrc.gov.uk/manuals/bimmanual/bim47825.htm - although it may not cover every scenario it does give a good general idea. I've got several driving instructor clients and think that they all fit neatly into 'Example One' and therefore claim the fixed rate (previously £2, now £3 per week)

Quite right, I'd overlooked that one. Thanks Jodie! I guess if the client is actually working from home then the apportionment way will be more tax effective, but for someone like a Driving Instructor (or a window cleaner) this works great!

deanshepherd

jamesm96 wrote: »

That said, I don't think I've ever known for a client to be disadvantaged by claiming mileage rather than actual costs.

Really? In 90% of cases I have the client would be much worse off claiming mileage. Aside from the recent increase from 40p to 45p per mile that rate has not increased since I first set foot in an accountancy practice 15 years ago. I'm not sure how much petrol was per litre back then but I remember it only cost £15 to fill up my Austin Metro. My Toyota Previa just rinsed me of £85!

deanshepherd

As for use of home, this is a topic where accountants love to discuss the finer points of calculating a reasonable and acceptable approximation but in 15 years in this industry I have never seen an inspector even question the amount claimed in any enquiry I have dealt with (aside from the recent Christopher Lunn debacle - google it - but that was for very different reasons).

I am beginning to think the Revenue couldn't care less.

PGM

deanshepherd wrote: »

Really? In 90% of cases I have the client would be much worse off claiming mileage. Aside from the recent increase from 40p to 45p per mile that rate has not increased since I first set foot in an accountancy practice 15 years ago. I'm not sure how much petrol was per litre back then but I remember it only cost £15 to fill up my Austin Metro. My Toyota Previa just rinsed me of £85!

I think you're right, unless you have a very economical and cheap to run car, and do around 10k miles.

jamesm96

deanshepherd wrote: »

Really? In 90% of cases I have the client would be much worse off claiming mileage. Aside from the recent increase from 40p to 45p per mile that rate has not increased since I first set foot in an accountancy practice 15 years ago. I'm not sure how much petrol was per litre back then but I remember it only cost £15 to fill up my Austin Metro. My Toyota Previa just rinsed me of £85!

PGM wrote:

I think you're right, unless you have a very economical and cheap to run car, and do around 10k miles.

That's fascinating. Yes, honestly... I suppose in fairness the vast majority of the clients I act for are Ltd companies so mileage is the only option unless they want to go the company car route, which obviously isn't advisable generally. Next time I have a sole trader to review I'll do a comparison... I'll happily stand corrected if it means I can save more tax for the clients!

Monsoon

That's really interesting. For all my sole traders, mileage is 90% of time the best option. Maybe my clients just have cheap/economical cars?!

deanshepherd

Or they are doing a lot of business miles.

I hope they kept a mileage log!

Monsoon

deanshepherd wrote: »

I hope they kept a mileage log!

Yes, I'm a meanie like that

clegganator

jamesm96 wrote: »

That's fascinating. Yes, honestly... I suppose in fairness the vast majority of the clients I act for are Ltd companies so mileage is the only option unless they want to go the company car route, which obviously isn't advisable generally. Next time I have a sole trader to review I'll do a comparison... I'll happily stand corrected if it means I can save more tax for the clients!

There is still something to be said for the company car route. If choosing a car with very low emissions and paying for private mileage it can work out more tax efficient to get one. But then, who wants to drive around in a Prius!

PGM

clegganator wrote: »

But then, who wants to drive around in a Prius!

Feels like thats the way things are going, so I'm enjoying my Landrover as long as possible