Claiming Motor Expenses

Ltd company directors using their personal car for business can claim motor expense of either 45p or 25p per mile based on the total mileage in a tax year. This is a tax-free mileage allowance and there is no need to report this on P11D form.

A corporation tax relief is claimed by netting off the mileage costs against the profits. The VAT registered business can claim back input VAT for the fuel element of the mileage allowance and this is done using the advisory fuel rates.

Frequently Asked Questions:

Can I claim other motor expenses along with the mileage allowance?

No, you can not claim actual motor expenses relating to your personal car if you are already claiming mileage. Your mileage claim covers the following key motor expenses:

  • buying the vehicle and associated depreciation in car value
  • Fuel
  • Repairs
  • Insurance
  • Servicing including MOT

Other than the mileage claim, there is the actual expense method, which is better ?

Unfortunately, this is no straight answer on this one as it depends on a number of factors such as the engine size of the car and % of business/personal journey.  The mileage claim is easier to manage and keep record of when compared to the actual method where you have to retain evidence of all expenses.

I am a sole trader, can I claim mileage allowance?

Absolutely, you can claim the mileage allowance provided your annual turnover is below the VAT threshold.

What if I use more than one car or vehicle?

It does not matter if you use more than one car, your total mileage (i.e. 10,000) is based on the total mileage you do in a year.

Can I switch between the actual expense method and the mileage claim?

No, once you have chosen a method for your car, you can not alternate between the methods. You can only switch between the methods once you have sold the existing car and replaced it with another car.

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