Self Employed tax question

[Rids64]

A friend is just starting up as a self-employed counsellor, she currently does work for three different organisations, all of which she invoices for her hours. She has to travel to three different locations (one for each organisation) and is unsure of what travel/fuel expenses she can claim for. Any help would be much appreciated.

[F1SERB]

She can legally claim for everything that is work related
travel to and from
insurance or part percentage of the insurance,tax,maintainence as long as it is for the employment side of her travels its allowed

[Simpo Two]

As I understand it you can either call it a private car, log every business trip and claim per mile, or call it a 'private car used for business' and assign a fair percentage of all motoring expenses to the business in one lump. But I may be wrong.

[Rids64]

Just to clarify, she has her own car, owned outright since before she started this role.

[Eric Mc]

The easiest option is to claim mileage - 45p per mile for the first 10,000 business miles, 25p thereafter.

[98elise]

Eric Mc said:

The easiest option is to claim mileage - 45p per mile for the first 10,000 business miles, 25p thereafter.

This is by far the easiest way. Just keep a simple log of the business miles, and times by the HMRC rates as above.

[megaphone]

98elise said:

Eric Mc said:

The easiest option is to claim mileage - 45p per mile for the first 10,000 business miles, 25p thereafter.

This is by far the easiest way. Just keep a simple log of the business miles, and times by the HMRC rates as above.

I thought this scheme was for employed people, claiming business milage that has not been re-imburesed by their employer? Can a small business/self employed person use the same scheme?

[Eric Mc]

Yes.

Although for self employed individuals it is generally an accounting entry in the year end profit and loss account as opposed to a formal payment or set of payments from the business to the proprietor.

Whether the proprietor chooses to physically pay to himself the amounts claimed or not is completely academic as sole traders are not taxed on income drawn from their business (drawings) but on the trading profit of the business BEFORE drawings are deducted.

The situation is a bit different if the business is a limited company.

Edited by Eric Mc on Friday 1st November 08:48

[megaphone]

I'm getting my calculator out then! I've always put all my car expenses through my 'business' and then taken a reasonable percentage off for personal use. I may be better off using the 45p/mile calculation.

Say I do the full 10k miles, that's £4500 I can take off my taxable income, correct?

Edited by megaphone on Friday 1st November 11:56

[Simpo Two]

If you just log miles, how then do you claim for any proportion of servicing, road tax, MOT etc? Or does it just come out of the 'profit' on 45p/mile?

[droopsnoot]

Exactly that - the 45p/mile is intended to cover all running costs for that mile.

[megaphone]

It would definitely simplify things for me. I've just found this http://www.hmrc.gov.uk/helpsheets/hs222.pdf#page=3 look at page 3.


ETA Although it is only applicable to turnover under the VAT limit £77k. I suppose if one is claiming back VAT on fuel etc it does not really work.

Maybe that is why my accountant has never suggested it...

Edited by megaphone on Friday 1st November 12:25

[Eric Mc]

VAT threshold currently £79,000

[98elise]

droopsnoot said:

Exactly that - the 45p/mile is intended to cover all running costs for that mile.

Exactly, thats why its so simple. The 45p covers every aspect of running a car for that mile, so no need to keep a track of physical expenditure, working out depreciation etc then splitting cost.

Its a very sensible way of doing things.