Business/private motoring costs ratio
Discussion
I use a Volvo estate for my kitchen business, and I use it privately as well. Would the IR think it fair to charge half the costs (repairs, petrol, insurance, road tax)to my business? It's fairly simple questions like these that remain unanswered in the books on running a business that one sees in WHSmiths etc
I used to use a Discovery. IIRC I used to split the cost at about 70/30 or even 80/20. It was used mostly for work so this was only fair. I never had any come back (yet).
If you can justify it, claim what is real. Don't claim it all though to avoid questions. (All in my own experience
)
Paul
If you can justify it, claim what is real. Don't claim it all though to avoid questions. (All in my own experience
) Paul
There are no standard business/private splits for tax purposes. Everybody's circumstances are different. The Inland Revenue recommend that the tax payer keeps a log of their business related mileage over the course of their business accounting year and then apply the relevant ratios when computing the business mileage as a proportion of total mileage.
Ideally, the tax payer should keep a log of all business trips undertaken. However, the Revenue will accept less complete records (such as a sample of business mileage over a number of months rather than a full year) so long as it represents a realistic picture of the normal business/private mileage ratio.
Simply guessing a percentage split with no supporting calculations behind the estimate is not really acceptable and could be challenged.
Detaile sof the mileage records do not have to be submitted to the Revenue when submitting annual accounts and tax returns. However, the calculations should be maintained on file and kept as evidence for production to the Inland Revenue if requested to do so. Don't forget, under the Self Assessment system, the Inland Revenue tend to accept more readily claims by tax payers but, if the tax payer's affairs are investigated, the Revenue could go back a number of years and ask for revisions to business/private use calculations. It happens and it can work out very expensive!
Hope that's of help.
>> Edited by eric mc on Thursday 11th March 08:21
Ideally, the tax payer should keep a log of all business trips undertaken. However, the Revenue will accept less complete records (such as a sample of business mileage over a number of months rather than a full year) so long as it represents a realistic picture of the normal business/private mileage ratio.
Simply guessing a percentage split with no supporting calculations behind the estimate is not really acceptable and could be challenged.
Detaile sof the mileage records do not have to be submitted to the Revenue when submitting annual accounts and tax returns. However, the calculations should be maintained on file and kept as evidence for production to the Inland Revenue if requested to do so. Don't forget, under the Self Assessment system, the Inland Revenue tend to accept more readily claims by tax payers but, if the tax payer's affairs are investigated, the Revenue could go back a number of years and ask for revisions to business/private use calculations. It happens and it can work out very expensive!
Hope that's of help.
>> Edited by eric mc on Thursday 11th March 08:21
john_p said:
I thought you had to take x pence per mile for business usage of a private car? (Can't remember the maximum - 40ish?) I didn't know you could literally charge a fair percentage of the costs back to the company.
I think it depends on whether it's a company car or not. Mine is a 'private car used for business'.
Sole traders can use a "pence per mile" basis for claiming their business motoring costs as an alternative to the "normal" method.
The "normal" method is putting through the business ALL the vehicle running costs (fuel, repairs and maintenance, insurance, road tax, capital allownace claim etc) and applying a business use/private use apportionment.
The treatment of cars in limited companies is a lot more involved.
The "normal" method is putting through the business ALL the vehicle running costs (fuel, repairs and maintenance, insurance, road tax, capital allownace claim etc) and applying a business use/private use apportionment.
The treatment of cars in limited companies is a lot more involved.
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