Car Expenses - more than just mileage
Updated: May 23, 2019
Many self employed people are aware of being able to claim mileage for using their cars, motorcycles and bicycles. However, there is more than one way to claim, which may help you recover more.
HMRC Mileage Rates
Cars - 45p for the first 10,000 miles, 25p thereafter
Motorcycle - 24p per mile
Bicycle - 20p per mile
HMRC have set rates that can be claimed back for the number of miles traveled using one's car, motorcycle or bicycle.
It is important to keep a log of your journeys should HMRC challenge anything.
However, all other costs cannot be claimed, apart from the interest on a loan.
The Alternative - Direct Cost Method
Claim part of your costs that relate to business
This method allows you to claim the proportion of the miles used for business against the vehicle costs.
As above, you will need to keep a list of the miles traveled for business purposes.
By taking the proportion of the car used for business travel and applying this to your total motor running costs for example, fuel, insurance, road tax, maintenance, etc. this will produce the tax deductible expense. You can also claim the interest on the loan used for the purpose of buying the vehicle.
Capital allowances may also be claimed for the cost of the vehicle. The rate that can be claimed depends on the emissions of the vehicle and the type, for example, for vans, the Annual Investment Allowance could be claimed which is 100% of the cost subject to the private use.
You can also claim 100% first year allowance on new cars with low CO2 emissions of not more than 110g/km.
However, cars that have CO2 emissions of more than 130g/km can only claim 8% of the cost per annum.
Different methods, different results, different amounts to deduct
The Direct Cost Method may be more favourable for those with cars with large fuel consumption or large maintenance cost, where the fixed mileage rate would not cover these expenses.
We would be happy to discuss these options with you.