Hi Guys,
Any tips on working out private usage for a self employed taxi driver?
Would it be better to divide annual mileage by 52 weeks and then ask him the distance to and from work, also the distance to school to drop kids off and work that out as a pecentage of the total mileage travelled in the year?
im a bit confused as the above would give typical private mileage in a normal week but not how school holidays would affect the percentage or if it should be calculated annually to start off with.
Was wondering what method other readers would use?
Thanks for your comments
Replies (9)
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Strictly speaking it's not for you to work it out, it's for him to tell you what it was.
Your method above assumes he never goes anywhere except to work or to take the kids to school. No-one on here can tell you whether those assumptions are correct for the individual in question, whom we obviously don't know.
Over claim
At least this way the Revenue can't argue he has over claimed on private usage.
Surely HMRC would never argue that somebody had over-claimed private usage?!
Shopping, commuting, leisure and socialising
The main four items that I would look at in the context of private use are:
ShoppingCommuting ("where is the business based?")LeisureSocialising
Add to the above list holidays where significant, eg. has a driving holiday driving across Europe or holidays in UK driving say 200 miles to the holiday destination.
When I last had a tax enquiry that queried the 10% private use adjustment in a partnership I got the partners to record their whole vehicle mileages for a whole month and this statistical sample then demonstrated an 8% private use adjustment as being fair - instead of 10%.
When considering private car mileage other factors to consider include:
Wife / partner has a car that's used for most or all of the four main private use categories aboveTo be compliant with drink-driving laws, walks to pub rather drives to pub
Under? Over?
Well, it's funny you should say that, because if it comes to the point where you have to estimate a taxi driver's takings, based on business mileage, HMRC are certainly going to be looking out for an overestimate of private mileage.
That said, you would only have to do that if the cab driver had kept less-than-perfect records. Hardly likely, is it? [You'll have to insert your own joke here. I saw what happened to that nice Mr Mellor after he picked a fight with a cab driver, so I'm not risking it]
#d500
Basically you've got the right idea. One generally accepted method is to agree a typical journey - say 2.5 miles - then work out the fare for that journey, based on the typical work pattern (tariffs vary according to the time of day. You then need to establish a figure for the engaged mileage, add in adjustments for tips, passengers and luggage (according to the local rules) and the rest is arithmetic.
There are are a couple more things that need to be said
in London, taximeters are calibrated to stop charging mileage at less than (I think) 9 mph. They charge on time instead, which usually makes for a more expensive journey. Bear in mind that the average speed of traffic in Central London is about 9-10 mph.Nobody claims this to be highly accurate, so you would only use it when you have to
Taxi driver private mikeag
The first thing you need to be certain of is it a taxi or private hire car, because most taxis are not insured for private use and therefore no private mileage, also no home to work use because as soon as they hit the road they are available for hire.
If it's a private hire you just need to quiz your client more specifically and stop the temptation to estimate
Don't estimate without
using actual mileage first.
You can keep track of business mileage for a week for an average week. Then you calculate the %age of business mileage and then apply that %age to future periods.