If you are self employed, you probably use your car for your business and that means you will incurr costs to keep the car running.

So what is a car….

A car for tax purposes is any motor vehicle of a kind normally used on public roads which has three or more wheels and either:

• is constructed or adapted mainly for carrying passengers or
• has to the rear of driver’s seat roofed accommodation which is fitted with side windows or which is constructed or adapted for the fitting of side windows

If you had a commercial vehicle instead of a car its likely that all the costs would be business costs because there would only be minimal incidental private use.

HMRC have just released a video to explain how you can claim motor expenses….

Bascially you can claim either a % of the total running costs (Actual Cost Method) or a mileage allowance payment.

The mileage allowance is 45p for the first 10,000 miles and then 25p per mile after that.

Using the Actual Cost Method you can claim a % (relating to business use) of :

• Capital Allowances (these help you recover tax on the purchase price of the vehicle)
• Fuel
• Road Tax
• Maintenance
• Insurance
• MOT
• Repairs

You may have other costs which are ‘wholly and exclusively’ for business such as:

• A Sat Nav to find customers and make deliveries
• Signage on the vehicle
• Modifications

Basically if a cost is ‘wholly and exclusively’ for business then you can claim 100% against tax.

steve@bicknells.net