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Tax returns and business mileage

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  • Tax returns and business mileage

    I keep putting it off but I am telling myself that I really need to get my tax return done and out of the way!

    Have just been reading the IR website re: mileage claims. It says on there that you can claim 40p for each mile, but it is talking in terms of an 'employee'? Does this apply also to me or is there a different rate if you are self employed?

    I was also reading another thread where someone mentioned there is a section of the site that goes through what you can claim for e.g. I bought a printer last year purley for my mosaic business, so I need to find out if I can claim anything back on this? Can someone point me in the right direction of where I find this info on the website (post a link if you can). I have had a llok but to no avail (I'm just rubbish I know! )

    Wish I could just hire an Accountant to do all of this, sure it would save me money in the end as I feel pretty clueless when it comes to all this!

    Thank you!!!
    Last edited by Katianne; 12-11-2008, 10:03 PM. Reason: Spelling!
    Katian Mosaics

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  • #2
    Phone your local tax office and go on one of ther free courses they ain't that scary.
    "You've Got to Keep Your Mind Wide Open" - AnnaSophia Robb
    my Folksy shop Goldy'sclearoutblog debaynewebdesign


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    • #3
      I think that's a good idea! Thanks, I will look into it.
      Katian Mosaics

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      • #4
        Re mileage, I note down all my travel in a mileage book (stationers) and when I file the tax return work out total miles divided into total petrol receipts times the amount used for business, I then write back the amount used for personal use as I put all my petrol through the books then adjust for the private miles.

        For a printer you usually capitalise this expense or that of any large item such as computers equipment etc. Put the total through your accounts then adjust back to allow for approx 20% for each year. In other words the first year reduce the capital expenditure by 80%, then each following year add back 20%.

        If you have never done accounts it is simpler to go on a course and you can always check with the small business centres as they usually have accountants that offer a reasonable service to do the tax return. Keeping your books is the most important and these can be done on a simple spread sheet, remember the easier they are to read the quicker the tax return can be completed by an accountant.

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        • #5
          I work out mine in pretty much the same way as Carolee - I keep a note of any business mileage, and then I put that mileage down as an expense at 40p per mile. So if I travelled 100 business miles, I would claim £40 as expenses for those miles.

          Please bear in mind that this mileage allowance is expected to cover petrol, wear & tear on the car etc, so you couldn't claim 40p per mile AND petrol, but unless your a pretty heavy footed driver 40p should cover your costs nicely.

          The rules are very different for someone using a car only for their business, then it can get a little complicated.

          Regarding the printer, you can claim a proportion of the purchase price as an expense in the first year, then a lesser % for each consecutive year up to a certain amount of years - if that makes sense.

          Above all, don't be frightened to give your local tax office a call, they were very helpful when i needed to work out the % for each year on a large piece of equipment for OH's business.

          The free courses are apparently quite good too - I keep meaning to go on one just to brush up a bit.

          Hope that helps,

          Claire
          Website; www.midshiresmakers.co.uk
          Facebook Pages: www.facebook.com/weedoncraftmarket
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          • #6
            Agaian, great advice which is very much appreciated. I am going to look into these courses - can I find them online?
            Katian Mosaics

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            • #7
              I went on their free course a few years ago to fill in my first return. It was a nice sunny summers day and nobody else turned up! So it was a one-to-one and the lady ended up filling it for me as she was explaining it!
              I used a bookkeeper after that and now have an accountant, some things are best left to the skilled!
              Bead Shop, 91 Liverpool Road, Penwortham, Preston, PR1 0QB, Lancashire. Mon-Fri 10am-5pm, Sat 10am-4pm, Sunday 11am-3pm.

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              • #8
                Try this link for HMRC workshops in your local area.

                http://www.hmrc.gov.uk/bst/index.htm

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                • #9
                  Thanks - have sent my booking requests!!!
                  Katian Mosaics

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                  • #10
                    Originally posted by Katianne View Post
                    Have just been reading the IR website re: mileage claims. It says on there that you can claim 40p for each mile, but it is talking in terms of an 'employee'? Does this apply also to me or is there a different rate if you are self employed?
                    I believe that if you are 'self employed' (e.g. Sole Trader), the same rules apply to this as they would to the Director of a Ltd company.

                    Therefore you can claim the first 10000 miles at 40p - but if doing this you would not claim petrol, insurance, etc - assuming it is a privately owned vehicle, since this is intended to cover "all costs incurred".

                    It drops afterwards, though I haven't hit the threshold yet (ever), so cannot recall immediately what to!

                    We keep a regular log (updated weekly) of any mileage incurred, along with other costs - then we tot them up and make the payments monthly, with salary - but you could easily do this at the end of the year for your return!
                    --Matt

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                    Beads, Charms & Findings - Jersey Craft Shop

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                    • #11
                      The thresholds are 40p per mile for the first 10,000 miles then 25p per mile thereafter. You can also claim 5p per passenger on journeys.

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                      • #12
                        Unless you are doing LOTS of business miles, then it is generally better to claim the 40p a mile than to consider having a company car.

                        It's also a lot more straightforward than pro-rata calculations for what was a business and what was a personal expenditure. The alternative to the flat rate is to calculate the percentage of miles for business - you can then calculate that against all the mileage costs, e.g. petrol, insurance, AA membership, road tax, all car bills etc. etc.
                        It's never too late to gyrate!

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