I am a self-employed, sole-trader journalist and media strategist. My work is mostly carried out from home. I have always claimed Use Of Home based on proportions of actual costs by room and usage.
My car is my personal car. In 2014/15, I clocked up 1,500 in business-related mileage - travel to train stations, to meetings, conferences etc. This was 25% of my vehicle's mileage during that year. In 2015/16, I expect this proportion to be lower, based on higher personal mileage.
2014/15 return has not yet been submitted.
My question... for 2014/15, can I claim any of the costs of the car as allowable? Would this be instead of or as well as mileage claims?
Current car purchase on a personal contract purchase (PCP) began with a deposit in February 2014 (2013/14), with ongoing monthly payments and a final balloon payment due February 2017.
I am also considering replacing the car on a similar basis before then, in 2015/16. So, also, would the cost of any new car be allowable in 2015/16 and going forward - deposit, repayments and balloon?
Thank-you for your input.
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It was the crux
Thanks, Peter.
That wasn't the crux of the question.
So I take it you mean some of the *car* costs are allowable?
Why do you take that?
Have you claimed actual costs or mileage on this vehicle in previous years? Or is this the first year with this vehicle?
mileage rate
The simplest method for you is to claim mileage. For business journeys, you can claim 45p per mile (up to 10,000 miles per tax year). This is designed to cover fuel, repairs, depreciation etc. So you cannot claim any other car costs if you use this method. So if you travel 1500 miles on business journeys, your tax return entry would be £675 for motoring costs. If you travel more than 10,000 miles in a year, the first 10,000 are claimed at 45p and the remainder at 25p.
The alternative is to apportion all vehicle costs between private and business (in which case you do not claim any mileage rate).
Mileage allowance PLUS interest
Don't forget that as a sole trader it is not just the mileage rate that you can claim. You can additionally claim the business proportion of the interest on the loan/HP.
Some maths will be needed to compute the interest element of the loan/HP repayments.
HP / loan deposit = no interest element
There would be no interest included in the deposit, only interest included in repayments.
I am aware of two methods of computing the interest:
(1) The more complicated method that I adovocate - "rule of 78" or "sum of the digits" method - this computes a higher charge in early years and lower interest charge in later years of HP / loan agreement
or
(2) Simple apportionment (ie. 12/x multiplied by total interest charges = 12 months interest charge to claim [where x = total interst charges], less of course 25% private use as stated in post of Sun, 16/08/2015 - 10:15
record keeping
Without wanting to state the obvious - but you say you have not claimed for the car previously - you must keep records of every business journey. Where you went from and to (HMRC may want to check that they agree the distance), your mileage, and the purpose of the journey.
Like all business records, you must keep the paperwork for 6 years.