Mileage Claims (Last Updated 5th May 2009)

You are probably aware that claiming mileage through a Limited company is a good way to get some extra cash out of the business.

HMRC have standard rates for claiming mileage through a business and provided you use the standard rates there is no extra taxable benefit from doing this.  You get the money out effectively tax free and the business suffers a tax deductable expense.

The following rates can only be used if you are using your own car for business mileage.  I.E. The car is registered to you and owned by you and you pay for the upkeep of the car.

If you are considering for your business to buy and maintain the car then further factors need to be considered such as taxable benefits etc.  Here we shall look at the mileage claims in respect of using your own personal car for business use.

It can be tax advantageous for the company to buy and maintain a car, especially where VAT is concerned and in the case of expensive cars.  It is worth noting also, that vans or commercial vehicles have different rules.

The HMRC mileage rates

 

Vehicle                                      Rate for First 10,000                             Rate for Mileage

                                                                    Business Miles                       Thereafter

 

CARS                                                           40p                                                             25p

 

MOTOR CYCLES                                       24p                                                             24p

 

BICYCLES                                                  20p                                                             20p

 

 

You can see that mileage can also be claimed in respect of business travel by bicycle!  Of course in reality this is unlikely to make much difference and means you may turn up to your client hot and sweaty!

 

Example

 

If you do 15,000 miles in one year, (tax year) then you can claim:

 

10,000 x 40p                                            4,000.00

5,000 x 25p                                              1,250.00

 

Making a Total of:                                  5,250.00

 

You will have course, have to fund the travel yourself, but the benefit above usually more than makes up for this unless you have an expensive fuel inefficient car.

 

Keeping Records

 

In order to back up your claim, it is highly recommended that you keep a log of the business miles travelled and the purpose of the travel including client names etc.

This means that if HMRC ever query your submission you have full and proper backup to the claim.

The mileage claimed should also be consistent with the vehicle mileage otherwise you might have to find yourself putting the clock forward on your car!

 

Generally it is advisable to note down on each business journey made:

 

· Date

· Starting Mileage of the vehicle

· Ending Mileage of the vehicle

· Starting Location

· Ending Location

· Nature of trip

· Client name if one visited

 

NB - It is not possible to claim mileage for travel to and from your usual place of work even if it is your business.  It is, however, possible to claim the mileage for combined personal and business trips if they are to the same destination or part thereof.

 

What can I do with VAT?

 

Yes!  You can claim VAT back on business mileage expense. 

 

The mileage claim is treated as VAT inclusive, thus if you claim £100.00 in mileage the VAT element claimable is:

 

£100.00   *               15/115                     =               £13.04   -   (VAT Rate of 15%)

 

You should always keep all fuel VAT receipts as a back up in case of investigation.

 

The receipts you keep in respect of VAT claims should pre date the business travel and contain at least the amount of VAT you are reclaiming.

(VAT Rate of 15%)

And finally, YES, we can help you if get a problem in this area. 

 

Contact us for a free initial consultation.