Vehicles and simplified expenses

Vehicles and simplified expenses

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(Apologies in advance - I don't seem able to start new paragraphs so this will all be one big lump of a question) I wondered if someone could clarify something regarding the option of using simplified expenses for vehicles. As I understand it, HMRC's concession to allow sole traders to claim mileage rather than a proportion of actual costs is being withdrawn in April 2013 and so claiming mileage will have to be done under the simplified expenses scheme. Is there an option for someone who was claiming AMR to decide not to adopt simplified expenses for vehicles and revert back to actual costs on the same car? Or, do the rules regarding not switching methods until the car is replaced still hold? Everything I read says that you can choose not to adopt simplified expenses if you wish. Are those statements technically correct?

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Scalloway Castle
By scalloway
25th Sep 2013 20:30

Revenue & Customs Brief 14/13

This is what I found on the HMRC site

 

http://www.hmrc.gov.uk/briefs/income-tax/brief1413.htm

 

 Under the 'simplified expenses' rules, businesses can calculate allowable expenditure on vehicles using a flat rate based on mileage. This means that actual costs incurred do not need to be recorded, nor do capital allowances need to be calculated.
Businesses can choose to use the flat rates. However, once the flat rate has been used in relation to a particular vehicle, this method of calculation must continue to be used for as long as the vehicle remains in the business. If capital allowances have already been claimed in respect of a particular vehicle, then the flat rate cannot be claimed in respect of that vehicle.

Where the 'simplified expenses' rules are not used, allowable expenses and capital allowances are calculated in the normal way unless the business has opted to use the cash basis, in which case capital allowances are only used for cars.

 

It doesn't seem much diffrerent to what was before.

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Replying to lionofludesch:
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By Catherine123456
25th Sep 2013 22:37

Thanks Scalloway

I had read that but wondered whether technically the flat rate and AMR were two different things - the first is defined in statute and the second is an HMRC concession. I get that once you start using the simplified expenses flat rate you have to stick to that method but wondered if we had an option to switch for this year only. Just a thought - it hasn't come up in practice but I was just curious. 

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By agburton
26th Sep 2013 07:54

Slightly confused

Sorry, but if you continue to use "proper" (Accruals) accounting do you still have the option to use the "simplified expenses" 45p a mile?

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Scalloway Castle
By scalloway
26th Sep 2013 16:30

From that document

Page 12

 

1. The draft legislation includes three types of simplified expenses: expenditure on motor vehicles, use of home for business purposes, and premises used for both home and for business purposes.
2. The key principles underlying the simplified expenses are that:
• these types of allowable expenses may be calculated using a simple flat rate allowance, rather than a potentially complex apportionment of actual expenditure
they are entirely optional for those using the cash basis and for those outside the cash basis.
 

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