#Business “Am I better off claims 45p per Mile or full cost version?”


So, you are going Self Employed and have a vehicle. Which method of tax relief is best for you? Each person has different circumstances so this Blog cannot answer all your differing Businesses, so it is a general comment, which you will need to put in your own context.
The easiest method is to create a daily log of your business mileage and claim this annual mileage x 45p. E.g. You travel 5,000 Business miles you will claim in costs £2,250 on your tax return.
This method is particularly beneficial if you have an energy efficient, low value vehicle, and high mpg.
The other method is to claim full costs.
This is more complicated though. You will still need to keep a mileage log. You can only claim a proportion of costs based on useage. E.g. You travel 10,000 miles in the year, and 5,000 of these are Business, you can only claim 50% of the costs. 50% of road tax, 50% insurance, 50% of fuel bought in the year etc.
An example similar to the one above with 5,000 miles driving an older car that does 30 miles per gallon in urban driving at £7.00 per gallon(appreciate you buy in litres) would equate to £1,166.
If your road tax was about £250, and insurance was £450, you could claim 50% of this which equates to £350. Your total so far is only £1,516.
You can claim 50% of running costs, servicing, tyres, mot etc. but if this is not going to equate to method 1 above, think is it worth the hassle of receipts etc?
I cannot give you an answer to capital allowances or depreciation etc on method 2 as all Vans and Cars are treated individually based on age, type Eco values etc. HMRC the place to go for more details on that.
Note this is for guidance only!
I am not an Accountant, nor employed by HMRC.
Please visit http://www.hmrc.gov.uk for full details, or speak to an Accountant if you need more information.
I hope this helps?
As always you can reach me at FYCreatives, Blackpool on 01253477147 or Orvia on 01772422242
Kindest thoughts, Geoff Reeves

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