Imagine a courier who owns a car and a van. He never uses the van for any personal trip, except for commuting to the same warehouse every morning.
From his home to the warehouse there are 10 miles - 20 minutes.
Once in the warehouse, he picks up the parcels. Delivers on average 140 parcels every day, during 9 hours, driving 40 miles on route.
Then he goes back to warehouse to leave any non-delivered parcel, and then home again, 10 miles, 20 minutes.
I am trying to understand which % of personal use of business vehicle would be more tax efficient but reasonable at the same time for HMRC.
In terms of miles, his personal use is (10+10)/ (10+10+40) = 25%
In terms of time, his personal use is 0.3 hours + 0.3 hours / 9.6 hours = 6.3%
Two questions please:
Q1) All the guidance I find say the personal use is calculated based on miles. 25% looks very unfair - most of the petrol is spent starting over and over the engine in different deliveries and short trips. How do you calculate this?
Q2) The insurance of the VAN is £7000 per year due to the courier risk. Can this be claimed 100% as business expense? The courier would not have this insurance if he was not in this business.