I am computing accounts for a 20 year period for a client. Client was self employed earning £5k commission per annum, HMRC have discovered the earnings and enquiry is in progress. Income and expenditure accounts for the period have been requested.
In relation to motoring costs (fuel, tax, insurance, repairs/servicing and capital allowances), is it correct that by agreeing a claim for AMAP rates with the Inspector at 45p / 40p per mile based on agreed level of business mileage that this expense will effectively include all motoring costs AND capital allowances for the vehicle?
Would it be more tax effective (but not more time effective obviously!) to compute fuel prices for each year and calculate based on fuel costs based on engine/fuel type, and then also claim tax deduction for motor tax, insurance, repairs and capital allowances?
My main issue with not using AMAP rates is that the client really won't know the vehicle in use for the last 20 years! So AMAP would be easier to compute.
Replies (10)
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Go with mileage
The mileage rate includes EVERYTHING.
I usually go with the mileage rate because in the long term it is usually better and you can't change method unless you change the vehicle.
loan interest
The mileage rate doesn't cover hire purchase/loan interest: -
http://www.hmrc.gov.uk/manuals/bimmanual/BIM47701.htm
This may, of course, be difficult to ascertain if he doesn't know what car he had. Having said that, the mileage rate may also be a problem because there used to be different rates for different engine sizes (not just the 40p/25p per mile)
There were no previous AMAP rates
Anyone got a link to the rates before 6 April 2002?
AMAPs were introduced by FA2001 with effect from 6 April 2002. Prior to that employees had to claim actual expenses and capital allowances too. You're not going to be able to use AMAP rates going back 20 years.
HMRC's 480 Expenses and Benefits current pamphlet clearly says that the AMAP includes
loan interest
From memory there was a time when the AMAP didn't include interest. Can't recall that date this changed but it was before 2009 2010
Given the background, I'd opt for AMAP !
480 only applies to employees
HMRC's 480 Expenses and Benefits current pamphlet clearly says that the AMAP includes
loan interest
From memory there was a time when the AMAP didn't include interest. Can't recall that date this changed but it was before 2009 2010
Given the background, I'd opt for AMAP !
Different rules apply for self employed as in allowability of loan / HP interest in addition to the mileage rate.
My notes from the year 2008 tell me that what I say is confirmed at:
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http://www.hmrc.gov.uk/manuals/bimmanual/BIM47701.htm
" The taxpayer can claim the business proportion of the interest on a loan used to purchase the vehicle or the finance element of a hire purchase or finance lease. "
AMAP
AMAPs replaced the Fixed Profit Car Scheme, which we operated for employees' business mileage before April 2002.
Whillans Tax Tables used to contain a table
of AA or RAC rates which calculated the running costs of cars per mile per annum.
If you can find the old set in the office, or someones office, the 2002 wil contain 1992-2002 if I remember rightly.
There was always at least one person in an office who kept the historical stuff like this with pride and HMRC will happily accept claims based on those figures which included depreciation, petrol, road tax, insurance etc etc
If he always drove cars of cc a particular cc as opposed to make there will be a rate for that band
previous rates
The rates for 1995/96 and 1996/97 are here: -
http://archive.treasury.gov.uk/pub/text/budget95/rev32.txt
The rates from 1997/1998 to 2001/02 are here: -
http://www.accsinfo.co.uk/RAMR.htm
The rates for earlier years were: -
Tax Mileage up to 1001- 1501- over
year 1000cc 1500cc 2000cc 2000cc
1995/6 up to 4000 27p 34p 43p 60p
over 4000 15p 19p 23p 32p
1994/5 up to 4000 27p 33p 41p 56p
over 4000 15p 19p 23p 31p
1993/4 up to 4000 26p 32p 40p 54p
over 4000 15p 18p 22p 30p
1992/3 up to 4000 25p 30p 38p 51p
over 4000 14p 17p 21p 27p
The best of luck to you!
Magic memories we have
I have a feeling the AA rates were more generous than the FCPS rates but can't guarnatee that