Accountancy query

I'm currently using the business mileage scheme to account for all my motoring costs, which I'm counting as fuel, servicing plus parts, depreciation, courier insurance, MOT, road tax.

Where I'm not 100% sure is with GIT/PL insurance. Is this strictly a vehicle cost, as it is more to do with insuring goods and the general public? Obviously it's beneficial to find costs which are outside the scope of business mileage costs, so I wondered if anyone knows for sure.

I don't know if I'm doing it wrong but I claim my business mileage instead of fuel costs but still put down servicing costs insurance road tax as expenses on top of my mileage allowance. My accountant has never questioned it. Also, I claim up to five pounds a day subsistence without receipts. If you work from home you can claim so much for gas and electricity costs, not sure how much, and a percentage of your home phone bill. As my wife is not a tax payer I pay her between 30 and 50 pounds a week for sorting my receipts and bank statements etc.

Have a chat with an accountant. I do all my figures then hand them to my accountant and he does my self assessment form for just over 100.00.

I put down everything including mobile phone, stationery, stamps, cleaning stuff, work clothes. In fact anything to do with driving the van and doing the job.

NC Couriers said:

---

I'm currently using the business mileage scheme to account for all my motoring costs, which I'm counting as fuel, servicing plus parts, depreciation, courier insurance, MOT, road tax.

Where I'm not 100% sure is with GIT/PL insurance. Is this strictly a vehicle cost, as it is more to do with insuring goods and the general public? Obviously it's beneficial to find costs which are outside the scope of business mileage costs, so I wondered if anyone knows for sure.

I think you have got it right as thats what my accountant does. 45/25p mileage allowance is claimed against tax but not fuel, servicing, motor insurance and road tax. 50k miles = £14500 against tax. I claim phone, broadband, heat and light and business insurance ie Pl & GIT,along with 15% of my property bills, 25% depreciation on van and £5per day subsistance. Also interest on any van finance. Vat is seperate and claimed back on every vat invoice regardless.

If you use the mileage scheme you can't include any motoring costs, but as GIT and PL are not dependent on your vehicle (or at least mine aren't) then you can include them. I don't think you can claim depreciation on your van though.

Here's a couple of handy links that cover the subjects in this thread and more

hs222.pdf

Thetaxationofsoletraders.pdf

NC Couriers said:

---

I'm currently using the business mileage scheme to account for all my motoring costs, which I'm counting as fuel, servicing plus parts, depreciation, courier insurance, MOT, road tax.

Where I'm not 100% sure is with GIT/PL insurance. Is this strictly a vehicle cost, as it is more to do with insuring goods and the general public? Obviously it's beneficial to find costs which are outside the scope of business mileage costs, so I wondered if anyone knows for sure.

My understanding is this; ANY cost for motoring connected to your business is deductible. I. E. Insurance, fuel servicing, repairs, tyres etc. Strangely, I am told, MOT's are excluded.

You can claim 45 p per mile for the first 10000 miles and 25p for EVERY mile after that. If you did 100000 miles a year that would equate to £4500 for the first 10000 miles and £18750 for the remaining 75000. Therefore, you can claim £23250 against your "profit". You can then claim such things as mobile phone bills, internet, organisation fees such as MT Van, CE and CX membership fees, work clothes, stationary, buying new phones etc, etc. the list is almost endless.

If you did 100000 total in a year in a small van and charged 60p per mile, of that 100000 miles possibly half is the outward (Paid) journey, you then have to return to base so as much as 50000 miles is "unpaid". 50000 miles at .60 is an income of £30000, less the £23250 claim for mileage would leave a taxable profit of £6750. the cost of your other expenses as mentioned above comes off this 6750 which can then reduce your profit again. If the combined cost of your other expenses total £2000 for example your profit is reduced by 2000 to £4750. You then have your personal allowances of £10500 so suddenly, on a turnover of £30000 you have no tax liability and could possibly even benefit from a tax rebate!

Get yourself a really good accountant- what they cost can easily be saved by the money they save you

Your maths is a bit out there, 100,000 miles in a year would earn you an allowance of £27000 currently. And you don't get a tax rebate just because your taxable profits are less than your total tax allowance!

Correct, I only allowed 75000 instead of 90000! dont know why I did that. If you then claim £27000 against a turnover of £30K you would then only have to find £3000 of other expenses to clear the tax bill. The rebate could be earned if you could further spend/can claim more than your personal allowance. According to my accountant there are so many ways of doing the sums on this, as other people have said claiming for heat and light etc. You can claim for decorating one room in your house to use as an office. I rent a compound, so I could claim every penny that costs me, if I had a dog I could claim that as a guard dog etc etc the list you can claim is endless, do you have a second car? however it all has to be within acceptable boundaries and not in the realms of stupidity. I have claimed for a sheepskin coat in the past because I "represent" my company I have to "show" an image of prosperity etc. It is all down to how good your accountant is. I have had some bad ones, some REALLY bad ones and recently an absolute gem who was very good at "interpretation". Ask yourself why it is all the top companies employ top flight accountancy firms?, because they save them a fortune in paying taxes

If you're currently using the business mileage allowance scheme then NO, you can't claim for Fuel or insurance.

https://www.gov.uk/simplified-expenses-checker is another useful site where you can work out what you can and cannot claim for.

It'll ask you to calculate various costs, and for fuel, based on 100,000 miles and your van doing 50 miles to the gallon, thats 2000 gallons at £6.50 per gallon, so a cost of £13000. There are other expenses you'll have to work out too, but it is interesting to note how much of your turnover is tax deductable.

I think there are an awful lot of legit couriers payin too much tax, and at a time when they can least afford to

GeeGee vans said:

---

NC Couriers said:

---

I'm currently using the business mileage scheme to account for all my motoring costs, which I'm counting as fuel, servicing plus parts, depreciation, courier insurance, MOT, road tax.

Where I'm not 100% sure is with GIT/PL insurance. Is this strictly a vehicle cost, as it is more to do with insuring goods and the general public? Obviously it's beneficial to find costs which are outside the scope of business mileage costs, so I wondered if anyone knows for sure.

My understanding is this; ANY cost for motoring connected to your business is deductible. I. E. Insurance, fuel servicing, repairs, tyres etc. Strangely, I am told, MOT's are excluded.

You can claim 45 p per mile for the first 10000 miles and 25p for EVERY mile after that. If you did 100000 miles a year that would equate to £4500 for the first 10000 miles and £18750 for the remaining 75000. Therefore, you can claim £23250 against your "profit". You can then claim such things as mobile phone bills, internet, organisation fees such as MT Van, CE and CX membership fees, work clothes, stationary, buying new phones etc, etc. the list is almost endless.

If you did 100000 total in a year in a small van and charged 60p per mile, of that 100000 miles possibly half is the outward (Paid) journey, you then have to return to base so as much as 50000 miles is "unpaid". 50000 miles at .60 is an income of £30000, less the £23250 claim for mileage would leave a taxable profit of £6750. the cost of your other expenses as mentioned above comes off this 6750 which can then reduce your profit again. If the combined cost of your other expenses total £2000 for example your profit is reduced by 2000 to £4750. You then have your personal allowances of £10500 so suddenly, on a turnover of £30000 you have no tax liability and could possibly even benefit from a tax rebate!

Get yourself a really good accountant- what they cost can easily be saved by the money they save you

On £4750 (£90/week) profit how do you pay for rent/mortgage?

Thanks for the replies. I think I'll be able to claim the GIT/PL on top of the mileage allowance. I am quite sure that depreciation falls within the scope of business mileage allowance, as the HMRC guidance specifically states this and goes further to state that business mileage cannot be claimed on any vehicle where capital allowance has been claimed. I do have a useful database which I knocked up which works out both scenarios (claiming all vehicle costs versus business miles alone) and business mileage is a very clear winner if you are doing heavy mileage.

I will be looking into that subsistence allowance of £5 per day - 46 weeks x 5 days x £5 =£1150 per year, so quite a useful amount, although a fiver barely covers a Burger King these days ;)

Re home use as office. There is another flat rate scheme for this which covers electric and heating for your home office space. It goes up in bands and if you spend 2 hours per day doing office stuff at home then you can claim £18 per month (there are higher rates than this). Broadband and phone use are not included in this. It might be more marginal whether this works out better than claiming a percentage of utility bills, but the simplicity seems to make it worthwhile.

Am/pm: you asked how to survive on £4500 profit. Remember there is legitimately claimed reportable profit and there is actual 'cash in pocket' profit. Business mileage and the flat rate Vat scheme help the actual profit to become sizeably more than the reported profit.

Another big plus is if you are on child and working tax credits as the low reported profit can keep the 41p in the pound benefit withdrawal to a minimum. Basically any couples earnings above £6420 cause TC to reduce by 41p per £, which could mean you not getting any help with childcare costs. So, if business mileage can be used to reduce your reportable profit by £3k then you not only save £600 in tax, £360 in NI, but also keep £1230 in tax credits.

If you really want to max out the savings then you could bear in mind that declared earnings to the tax credits people are after pension contributions, so you could bung a load into a Sipp each year and keep more tax credits. Very useful if you're not far off the age of 55 where you can start getting your pension money back - just think of it as deferred income.

FYI, here's some links to where I got the info from regarding business mileage, etc:

Business mileage including a big warning about depreciation/capital expense: link text

Home office use: link text

Tax credits and pension contributions (this is a staff guidance sheet, so should be accurate): link text