Limited company - car expenses question
Discussion
I've just set myself up as a limited company to cover a 3 month period of consultancy work.
I've agreed a daily rate with the customer and they are happy to cover my mileage costs on top of that.
I plan to lease a car for the 3 months of the contact.
How should I treat my car related costs? I'm presuming that I can charge the customer 40p/mile and offset my the cost of my lease against my tax?
Can someone help please.
I've agreed a daily rate with the customer and they are happy to cover my mileage costs on top of that.
I plan to lease a car for the 3 months of the contact.
How should I treat my car related costs? I'm presuming that I can charge the customer 40p/mile and offset my the cost of my lease against my tax?
Can someone help please.
How much you decide to charge your customers to cover your motoring and travel costs is entirely a commercial decision and is of no interest to HM Revenue and Customs - apart from the fact that they look on it as just additional income to the business. There are no statutory upper limits on the amounts you may wish to charge your customers for mileage.
You should include these Mileage Charges to your customers as part of your normal billing - it's up to you to decide whether you:
i) - use separate invoices to cover this income
ii) - include the mileage income as part of your normal invoices and show it separately on each invoice
iii) - include the mileage income as part of your normal invoices and NOT show it separately on each invoice
The Revenue is ALWAYS interested in how Directors/Sharholders take money out of their own companies. However, if a director reimburses to himself motoring costs from his own company under fixed mileage rate scheme, he will not be personally taxed on this income - and the business can claim the amounts charged as a legitimate business cost. The key factor is that the amount of mileage claimed is limited to 40p per mile for the first 10,0000 business miles and 25p per mile for business mileage above 10,000.
If the director sticks to the above methods, there will be no issues regarding taxable Benefits in Kind.
All the above is based on the assumption that the director is using his own personally owned car - not a company car.
You should include these Mileage Charges to your customers as part of your normal billing - it's up to you to decide whether you:
i) - use separate invoices to cover this income
ii) - include the mileage income as part of your normal invoices and show it separately on each invoice
iii) - include the mileage income as part of your normal invoices and NOT show it separately on each invoice
The Revenue is ALWAYS interested in how Directors/Sharholders take money out of their own companies. However, if a director reimburses to himself motoring costs from his own company under fixed mileage rate scheme, he will not be personally taxed on this income - and the business can claim the amounts charged as a legitimate business cost. The key factor is that the amount of mileage claimed is limited to 40p per mile for the first 10,0000 business miles and 25p per mile for business mileage above 10,000.
If the director sticks to the above methods, there will be no issues regarding taxable Benefits in Kind.
All the above is based on the assumption that the director is using his own personally owned car - not a company car.
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