self employed car allowance etc ...

[markmarkymark]

Yep folks I am getting an accountant ... but your comments on this please (those that are self employed etc)....

Suppose I start to use my car for my consultancy work (sole trader) and its 90% consultancy and 10% personal.

I understand that rather than worry about detailed records of every purchase and capital allowance etc, I can choose instead to claim expenses at 40p per mile (up to certain limits etc etc).

Suppose I did 1000 consultancy miles in a year, expenses would be £400. I understand I could then deduct this when working out taxable profits etc. So far so good.

but ... of course during the year I would have already spent money on fuel - out of my cash reserves and recorded this. I would assume that this would then be a disallowable expense because I was claiming the 40p / mile rate. Is this correct ?

thx

Mark

[Tricky]

I doubt you can claim the fuel and the allowance! - Check out this:
http://www.inlandrevenue.gov.uk/payetaxpayers/fagir124.shtml

[snodvan]

Yep folks I am getting an accountant ... but your comments on this please (those that are self employed etc)....

Suppose I start to use my car for my consultancy work (sole trader) and its 90% consultancy and 10% personal.

I understand that rather than worry about detailed records of every purchase and capital allowance etc, I can choose instead to claim expenses at 40p per mile (up to certain limits etc etc).

Suppose I did 1000 consultancy miles in a year, expenses would be £400. I understand I could then deduct this when working out taxable profits etc. So far so good.

but ... of course during the year I would have already spent money on fuel - out of my cash reserves and recorded this. I would assume that this would then be a disallowable expense because I was claiming the 40p / mile rate. Is this correct ?

thx

Mark

Yep,

Option 1- either you properly record all miles done for business and then charge x pence per mile (depends on engine size) but THEN you cannot claim for fuel or any other expenses - or

Option 2 - (a lot more work) Keep a proper record of all miles done on business AND all miles for personal use of the vehicle (so thjat you can accurately quote the % business miles) but then you can claim RAC/ AA membership, fuel, garage charges (repairs/ replacements or servicing) tyres, oil, window washer fluid etc etc in fact ANYTHING related to running the vehicle. If your % business use was say 50% (like mine) then you can claim 50% of the total vehicle costs as an operational expense set against profits.

Amongst other things your accountant will (should) check all of the claimed business miles against the fuel receipts / typical mpg etc and if he/she agrees with your % business use then will adjust the profit figures accordingly.

Clearly, depending on your actual business mileage either option 1 or option 2 could be more cost effective. An accountabnt should be able to give unbiased advaice - but I suspect that often they suggest option1 because it is "easier" for them to administer.

[markmarkymark]

Tricky / Snodvan

Thanks both for your help. Links / comments were very helpful indeed!

cheers

Mark