Simplified Expenses (Vehicle)

Gemwor FMAAT, AAT Licensed Accountant Posts: 21
Hi All,

This probably seems like a very simple question but I'm going around in circles with it so hoping someone can help.

Can simplified motor expenses (45p per mile etc) be claimed for business mileage for a car on Hire Purchase? (legal ownership passes at the end of the agreement and after all payments). I've looked at BIM75005 which says:

"The fixed rate deduction covers expenditure in respect of the acquisition, ownership, hire, leasing or use of cars, motor cycles or goods vehicles used for the purposes of the trade"

This implies hire would be covered. I've tried various other checks, even the HMRC simplified expenses checker which never actually asks about the ownership status of the vehicle. Rang the Croner helpline too who weren't really able to confirm either.

Obviously I just want to be sure.

Thanks in advance


  • CSan89
    CSan89 MAAT Posts: 207
    I'm guessing that it is saying that if an employee hires a car privately, they can't claim 45p for mileage and try and claim expenses for the hire costs as this is included in the 45p
    AAT Level 2&3 - 2016
    AAT Level 4 - 2017
    Personal Tax, Business Tax and External Auditing

    ACA/CTA -
    Certificate Level - Jan 2019
  • douglasstroud
    douglasstroud Registered Posts: 288 Dedicated contributor 🌟 🐡 🌟
    Is this the first year the vehicle is being accounted for? If so
    My understanding is that yes you can claim the flat rate expense or you could claim for Capital Allowances and the business use of the running costs.

    You will need to run the figures and see what works out best because once you have chosen a method you have to stick with it until you change the vehicle.
  • Gemwor
    Gemwor FMAAT, AAT Licensed Accountant Posts: 21
    Hi, yes new vehicle in year so option to decide - think flat rate would be best. Just need to be sure it’s allowable.
  • douglasstroud
    douglasstroud Registered Posts: 288 Dedicated contributor 🌟 🐡 🌟
    Yes it is allowable, the vehicle is treated as owned by the business the moment it comes into use.

    You need to work out the flat rate claim against the total capital cost of the vehicle from which you can claim 18% or 8% WDA annually as well as the interest being charged and any running costs.
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