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Any Answers answered: The 10,000 miles 45p limit

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20th Aug 2015
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A seemingly innocuous Any Answers thread caused a protracted debate on whether the 10,000 miles 45p limit is per person or per vehicle.

Initial answers were firmly in the “per person” camp. “Limit is per person, does not matter how many vehicles he uses,” advised Elnaugh. JCresswellTax agreed, “I am sure that the limits are 'per employment' so if you used two cars in your employment, you only get one lot of 10,000 @ 45p.”

The consensus was rocked when Steve Kesby entered and wrote, “For 2013/14, when the former concession was put on a statutory basis, onwards. ITTOIA 2005, s 94F refers. If the situation described in the OP arises in an accounts period that is assessable in 2013/14 or later, all of the mileage can be claimed at 45p.”

Steve Kesby later reversed his opinion and agreed with the per person/trade interpretation, but his initial reply sparked the debate. “Since Revenue guidance states that you do not have to use the flat rate for all of your vehicles but must use it for 'a vehicle' once you have started to use it then surely it is per vehicle,” wrote Peter-S.

So, we approached Rebecca Benneyworth, tax lecturer and former chair of the ICAEW Tax Faculty, to get her take. “It’s per person, rather than per vehicle and it’s 10,000 miles maximum,” said Benneyworth. “That’s one of the disadvantages of using several vehicles in a business using the mileage rates.

“If you’ve got several vehicles and they each do, say, and they each do 4,000 miles in each, you’ve got your costs for you six vehicles, but once you reach 10,000 overall, you’ve got to go down to the lower rate.”

According to Benneyworth, this issue was one of the big warnings about claiming fixed rate deductions when the new rules were developed. “HMRC's intention to restrict to 10,000 miles per person irrespective of the number of vehicles used was made clear at the outset, and in my view the parliamentary draughtsman did the job with subsections 3-4 to s94F,” said Benneyworth.

“By referring to the total number of business miles and not the vehicle in describing the ‘Appropriate mileage amount’ (the title of s94F) - the amount you may claim - I consider that the answer is more obvious than the length of this debate indicates.”

There you go! Or do you disagree with Rebecca’s assertion?

Replies (31)

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By mrme89
20th Aug 2015 16:51

Was it easier for Sift to say that Steve K reversed his opinion, rather than say Portia gave the correct answer?

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Francois
By Francois Badenhorst
20th Aug 2015 21:12

I see what you did there

But no, Steve Kesby actually did reverse his opinion. 

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By mrme89
20th Aug 2015 21:45

He did - based on Portia's answer. Which was correct, wasn't it?

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By Andy Reeves
21st Aug 2015 10:16

Per person or per trade

The initial debate also considered whether the 10k limit was per trade rather than per person, but Rebecca does not seem to have addressed this point.

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By listerramjet
21st Aug 2015 10:16

opinions are interesting

but the only one that matters is that of the court.  Has it ever been tested?

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Francois
By Francois Badenhorst
21st Aug 2015 10:43

Welp,

 I, for one, am glad PNL was able to help another member. That's what the Aweb community is about. 

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By johnatwilliamsgiles
21st Aug 2015 10:51

Mileage debate

Must say that I agree with Rebecca but I put the question to HMRC during their webinar yesterday, "Simpler Income Tax for the Self-Employed"  The had already stated that if a trader used a van and a car they could claim the business mileage allowance for one and the business proportion of total running costs for the other.

I asked if the 10k allowance @ 45p could also be used for each vehicle and was told that it could.  Take your pick!!

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By petestar1969
21st Aug 2015 11:22

Well

I always believed the 10,000 limit was per person otherwise you could use a different vehicle each month, do 10,000 miles each month and get it all at 45p which would be ridiculous.

The per trade point though I believe is valid.

If you are genuinely carrying on two separate self-employment trades, say 3 days a week on each trade, I would say that you get 10,000 at 45p for each business.

 

 

 

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Replying to Survivor:
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By User deleted
21st Aug 2015 13:57

No it wouldn't ...

petestar1969 wrote:

I always believed the 10,000 limit was per person otherwise you could use a different vehicle each month, do 10,000 miles each month and get it all at 45p which would be ridiculous.

The per trade point though I believe is valid.

If you are genuinely carrying on two separate self-employment trades, say 3 days a week on each trade, I would say that you get 10,000 at 45p for each business.

The 10,000 band is to reflect the depreciation, which is negligible after the 10,000 pa has been breached. Who would have 12 vehicles to allow one per month when doing 120,000 business miles?

Not saying it is per vehicle or not, just that it would not be ridiculous if it is.

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By vicpeake
21st Aug 2015 11:19

Mileage Debate

 

Interesting debate and I go with the "per person" for whatever mileage is used.

However, what happens when a sole trader not only travels on his/her own account and also works extensively for a company that allows the mileage rate of 0.45ppm [1st 10,000 miles] and 0.25ppm thereafter for essential travel on their behalf.

The sole trader also travels extensively on his/her clients behalf and claims all the MRE in his/her own business - subject to the Vat add back in the Vat return.

Should the sole trader then deduct all the receipts received from the company from his/her total MRE claimed in the sole trading accounts - otherwise there could be a double accounting issue.

 

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By pauljohnston
21st Aug 2015 11:24

@vicpeake

We treated it as two different trades but with only one 10k limit.

The next question surely is if a person has a company car and also is self-employed. Assuming private fuel is not paid by the employer can the 45/25p be claimed for self-employed business mileage or should it be the HMRC fuel rates.  I have no idea and can see both sides of any argument.

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By frankfx
21st Aug 2015 11:30

Hmrc manuals and guidance fail to provide real world example and the type of situations outlined in this debate 

John Williams Giles, above thread  , could he get that answer in writing from HMRC? 

I often wonder who authors the manuals and to whom topics were circulated prior to publication, to ensure real world scenarios are addressed 

Do the hmrc authors read Accounting Web? 

Rebecca benmeyworyh, may know the answer! 

 

 

 

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By Business Advisor
21st Aug 2015 11:34

Mileage claims

Can a person who drives an electric car still claim the mileage allowance even though there are no fuel costs.

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Replying to Paul Crowley:
By cheekychappy
21st Aug 2015 11:52

F'n Hell

Business Advisor wrote:

Can a person who drives an electric car still claim the mileage allowance even though there are no fuel costs.

 

Does the electric car run on nothing, or does it, which I suspect, run on electric? Electric happens to be a fuel, it just isn't petrol or diesel.

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By rtrussell01
21st Aug 2015 12:37

AMAPs and electric cars

You can claim the standard 45p/25p on electric cars. The average running cost of an electric vehicle can be just as high as a liquid fuelled vehicle, and will be much higher if annual mileage is low due to the high initial cost. The mileage allowance is based on total costs rather than just fuel costs. HMRC currently don't consider electricity to be a fuel because it isn't "burnt".

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By keithas
21st Aug 2015 12:43

Electric?

Electric isn't a fuel, it's an adjective.

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By patricia caputo
21st Aug 2015 12:53

Per employment

 

I was given to understand that if a person had two employments they were allowed the 10,000 miles @ 45p in each employment.

 

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Replying to Richard Grant:
By mrme89
21st Aug 2015 12:57

Self-employed

patricia caputo wrote:

 

I was given to understand that if a person had two employments they were allowed the 10,000 miles @ 45p in each employment.

 

 

The question was about the self-employed.

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By mrme89
21st Aug 2015 12:56

Off topic now...
Electricity is considered to be an alternative fuel under the Energy Policy Act 1992.

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By paulwithers
21st Aug 2015 14:11

Purpose of the 45p

My understanding is that the 45p is designed to cover two types of cost :

1. Petrol

2. Contribution to running costs of the vehicle (insurance,maintenance)

I further understood that a limit as to the level of subsidy in 2. above was applied hence the rate drops down after 10,000 miles. This makes perfect sense to me in respect of what the taxman is aiming to do. Therefore surely it must apply on a vehicle basis. However having just written this it now becomes obvious to me !    IF the taxman had not intended there to be a limit upon which the additional 20p be claimed, he would not have set a 10,000 mile limit.It is therefore clear to me that the taxman will contribute up to 10,000 miles the running cost of a private vehicle OR vehicles. It is a recognition and therefore an allowance to assist with the actual costs incurred but not unlimited to form a subsidy.

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By possep
21st Aug 2015 16:00

45p

What about:
If an individual had say three business vehicles in use in succession in the year and travelled 10,000 business miles in each in a tax year then I would assume that a proportion of the actual expenditure relating to business use could be claimed on the two vehicles with the dearer running costs and 45p per business mile on the remaining vehicle.

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By calculus.accountants
21st Aug 2015 23:00

I use the same vehicle for 2 businesses and so asked the question from hmrc and was told that it is per vehicle as it takes into account the running costs and depreciation of that vehicle which seems to makes sense. If I do more than 10,000 miles between both businesses then then once I reach 10,000 I can only claim the 25p rate.

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By AndrewV12
23rd Aug 2015 16:24

How has it come to this

Why is it all so vague and how has it come to this, HMRC never give concise lists or examples, loads of grey areas.  Its all open to mis-   interpretation if in doubt do what some accountants do and make up your own rules

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By frankfx
23rd Aug 2015 17:59

Vat grey muddy waters 50 shades

VAT status of the self employed business requires consideration. 

Do not wade into incorrect accounting and tax claims. 

The mileage basis 45p and 25p is  not available for a vat registered business, whereby the owner not an employee  the distinction is important,  wishes to account for / recover  motoring expenses. 

(A cheaply acquired  fuel and maintenance  efficient used vehicle makes a great candidate for the mileage basis.)

There are transitional rules on the mileage basis for newly registered vat businesses or voluntary registered businesses. 

Just thought on this lazy Sunday afternoon I'd have a break from 50 shades of grey j( tax advisers edition), 

 

 

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Replying to Anonymous.:
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By AndrewV12
24th Aug 2015 07:44

Mileage and vat regisration

The mileage basis 45p and 25p is  not available for a vat registered business, whereby the owner not an employee  the distinction is important,  wishes to account for / recover  motoring expenses. 

I will look into this. 

 

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By frankfx
24th Aug 2015 10:48

Vat turnover rule bim 75005

Thought I would revisit my comments in Monday morning work mode 

 

The simplified expenses guidance for 2013 14 makes zero reference to the artificial turnover rule. 

The old bim 47701 has not been cross referenced to the updated guidance 

 

And the new guidance makes no reference to the old stuff 

 

Typical of hmrc manuals. No thought to the broad range of readership and their needs. 

 

 

 

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By taylorstaxservices
27th Aug 2015 12:13

HMRC Software

Having run an example through HMRC software for simplified accounts using a change of car and in excess of 10,000 miles, relief is only allowed at 45P on the first 10,000 miles.............

It would seem HMRC's official stance is therefore to limit an individual to one 10,000 mile claim.

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By aayzed
27th Aug 2015 15:09

spock

what would a vulcan have made of HMRC?

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By abelljms
01st Sep 2015 17:53

per person

 

 

of course the fantabulous Benneyworth is right !

stop trying to ease through the cracks in HMRC/govt d(r)afting etc.

45p for 10k pa is loads for most cars anyway.

 

be grateful HMRCy haven't noticed the reduction in fuel costs and reduced it on 1 sept when they reduced all the other rates.

 when they set 45p rate fuel was c.£1.30-40 litre etc.

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By pauljohnston
02nd Sep 2015 13:31

@abeljms

But as pointed out by others the 45p is to cover fuel and all other costs.  Last year I if I remember correctely the AA worked out a mini clubman costs a £1 per mile.

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By Marion Hayes
25th Apr 2016 07:10

Self employment
Where an individual is self employed we may account for each business separately but there is only one self employment from a tax or nic point of view. This means that the application of one set of 10,000 miles makes perfect sense.

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