Car repairs to business?
Discussion
The 40p a mile claim is in lieu of normal vehicle running costs which would include the regular maintenance and servicing. That would normally preclude any normal repair bills.
As is often the case, tax treatment of costs is not always a clear cut issue and you MIGHT be able to make a valid case as to why you MIGHT think that additional repair costs over and above the annual maintenance and servicing MIGHT be claimable on top of the 40p a mile claim.
Obviously, if you were making the "normal" motor expense claims based on ACTUAL repairs and fuel bills, then any additional repairs would be included in the total for the year. Don't forget, however, the it would be expected that Motor Expenses claimed in this more traditional manner are restricted to ensure that the "private use" element of the motoring costs is not claimed - either by restricting the Motor Expenses figure in the profit and loss account or showing the full costs in the profit and loss account but reducing the claim by the private useage element in the tax computations.
If you were to make an additional repair claim on top of the 40p a mile claim, you would have to ensure that the private useage percentage was applied to the additional repair bill.
As is often the case, tax treatment of costs is not always a clear cut issue and you MIGHT be able to make a valid case as to why you MIGHT think that additional repair costs over and above the annual maintenance and servicing MIGHT be claimable on top of the 40p a mile claim.
Obviously, if you were making the "normal" motor expense claims based on ACTUAL repairs and fuel bills, then any additional repairs would be included in the total for the year. Don't forget, however, the it would be expected that Motor Expenses claimed in this more traditional manner are restricted to ensure that the "private use" element of the motoring costs is not claimed - either by restricting the Motor Expenses figure in the profit and loss account or showing the full costs in the profit and loss account but reducing the claim by the private useage element in the tax computations.
If you were to make an additional repair claim on top of the 40p a mile claim, you would have to ensure that the private useage percentage was applied to the additional repair bill.
Eric Mc said:
The 40p a mile claim is in lieu of normal vehicle running costs which would include the regular maintenance and servicing. That would normally preclude any normal repair bills.
As is often the case, tax treatment of costs is not always a clear cut issue and you MIGHT be able to make a valid case as to why you MIGHT think that additional repair costs over and above the annual maintenance and servicing MIGHT be claimable on top of the 40p a mile claim.
Obviously, if you were making the "normal" motor expense claims based on ACTUAL repairs and fuel bills, then any additional repairs would be included in the total for the year. Don't forget, however, the it would be expected that Motor Expenses claimed in this more traditional manner are restricted to ensure that the "private use" element of the motoring costs is not claimed - either by restricting the Motor Expenses figure in the profit and loss account or showing the full costs in the profit and loss account but reducing the claim by the private useage element in the tax computations.
If you were to make an additional repair claim on top of the 40p a mile claim, you would have to ensure that the private useage percentage was applied to the additional repair bill.
going for the traditional approach in this manner, what would be a suitable adjustment for a private usage to all the computations? (based on weekends for private usage)
Every case is different. The Revenue recommend that the tax payer keeps a reasonabley accurate mileage log of their business and private mileage from which they can determine the % Business versus the % Private.
They should monitor their mileage every year as no two years are ever the same.
In reality, they are usually happy to accept a calculation based on a review of a portion of the year as opposed to whole year provided that the portion selected is typical of the annual average.
What they don't like are wild guesses
They should monitor their mileage every year as no two years are ever the same.
In reality, they are usually happy to accept a calculation based on a review of a portion of the year as opposed to whole year provided that the portion selected is typical of the annual average.
What they don't like are wild guesses
ok, so basically a bit of substantiation behind it to show you did try some validation of submittals.
excellent, many thanks for that.
i might go the route of charging everything to the business then, and deducting personal usage. all in all, it may work out better for me.
thanks for that Eric!
excellent, many thanks for that.
i might go the route of charging everything to the business then, and deducting personal usage. all in all, it may work out better for me.
thanks for that Eric!
If you personally own the car (or even if you personally leased it), it is "your" car from a tax pont of view. In these circumstances, the most tax efficient way to deal withj normal expenses is to claim the 40p per mile (up to 10,000 business miles) and 25p per mile (10,000 and more business miles) as an expense claim directly from the company. In other words, the company writes out a cheque to you for your mileage claims - just like it would to a normal employee doing a business trip in his/her own car. The company can claim these costs as direct business expenses and private useage is not an issue. The amounts you receive as mileage claims from the company are completely tax free in your hands.
However, if the company paid directly for any excess repair bills in respect of YOUR car, then those costs would have to be declared as a tax Benefit in Kind and reported on the P11d.
If the company gives you extra cash to allow YOU personally to pay the repair bill, this extra cash would probably end up being taxed as additional salary under PAYE.
Cash payments to directors/shareholders can also be incorporated into dividends so there is the possibity of using dividends for extracting additional monies needed.
Finally, the state of your loan account with the company (if such an account exists) might provide you with an avenue for drawing some cash - although you would have to be very careful using the loan account for such purposes.
However, if the company paid directly for any excess repair bills in respect of YOUR car, then those costs would have to be declared as a tax Benefit in Kind and reported on the P11d.
If the company gives you extra cash to allow YOU personally to pay the repair bill, this extra cash would probably end up being taxed as additional salary under PAYE.
Cash payments to directors/shareholders can also be incorporated into dividends so there is the possibity of using dividends for extracting additional monies needed.
Finally, the state of your loan account with the company (if such an account exists) might provide you with an avenue for drawing some cash - although you would have to be very careful using the loan account for such purposes.
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