This is how you claim tax relief on the cost of your business mileage. Put the result into your accounts as one of your day-to-day running costs, so that it reduces your profit and so reduces the amount you pay tax on. This rate is intended to cover all the costs of buying, running and repairing the car. For cars, HMRC’s rate is 45p per mile for the first 10,000 miles you travel on business in a tax year, then 25p a mile thereafter. To use the mileage method, add up all your business mileage for the tax year (6th April – 5th April), and then apply HMRC’s rate per mile to that. If you have never claimed any capital allowances on that car, then you can use the simplified expenses method to work out the cost of your business journeys. Sole traders can use one of these two methods to claim tax relief on business journeys in your own car. If you’re a sole trader, there’s no concept of a “company car” for you, because there’s no legal difference between you and your business, so you will always own the vehicle. In this article, Emily Coltman FCA, Chief Accountant to FreeAgent breaks down the different tax implications of using a company car versus your own vehicle for both sole traders and directors of limited companies.Ĭlearly, almost all contractors work via their own limited companies (or use an umbrella service), but as many freelancers work as sole traders, we’ve included both business types here for the sake of completeness. ![]() However, when it comes to claiming tax relief for the costs of these journeys, the rules can be confusing. Many contractors travel by car on business – they may be visiting client sites, or attending conferences and training sessions. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |