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Excess mileage charges re leased car

Excess mileage charges re leased car

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 Client has a leased car, 80% business use. Costs claimed in accounts are based upon rpm for business miles plus appropriate business % of finance interest element only. Leased car returned Nov 13 and has incurred £600 approx. of excess mileage charges. Is there an argument for charging part of this in the current accounts?

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By Darren Loring
18th Nov 2014 13:13

Query re your question

What do you mean by 'rpm for business miles' - if you are referring to the mileage rate allowable per HMRC (45pence per mile up to 10,000 miles, etc) and you are claiming this as the car is not a Company Car then you should not also be claimng any of the Vehicel Lease costs as the rate provided by HMRC is considered by them to include the business use of all the vehicel expenses.

Really the only extra motor costs you could charge are things which are not 'running costs' such as Parking charges and fines, London congestion charges, etc

If the lease company have charged a penalty for exceeding the allowed mileage then I believe HMRC would consider this to be a running costs for the vehicle and therefore not allowable as a business expense if the vehicle is not a Company Car.

The mileage rate you charge to the accounts should be based on the figure for business mileage for the year provided to you by the client - this would presumably include the 'excess' mileage noted by the lease company.

Please note that if you have been claiming lease costs through the business then HMRC would consider the car to be a Company Car with the obvious P11D issues!

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By Wanderer
18th Nov 2014 13:58

@Darren

Think you need to establish whether this is a limited company or sole trader / partnership first.

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RLI
By lionofludesch
18th Nov 2014 14:34

Unincorporated

As the OP mentions 80% business use, I'm assuming it's not a company.

If you've been claiming the 45/20p a mile, that's all you get.  The excess mileage charge is part of the contract price for the car.

Conversely, if I was claiming the lease payments against profits, I'd include the excess mileage charge on the same 20% private addback basis as the main rentals.

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By Darren Loring
18th Nov 2014 17:17

Did assume Company

I did assume it was a company as they were claiming Mileage Rate - if Sole Trader I would have thought they were better off putting all motor expenses through the business instead and disallowing 20%.

If a company or not they should not be claiming Mileage Rate and any other motor expenses, including Lease Costs.

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