Self-employed mileage allowance - borrowed vehicle

A last minute self assessment request!!

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Hi all,

I'm hoping someone in the community can clarify this for me.

I'm self-employed and completing a self assessment for the first time. I have income from 2 rental properties acquired in the year, and some consultancy work, and I understand that I can claim simplified mileage expenses of 45p/mile for business-related travel to the properties.

My question is whether this can be claimed on a car that I do not own. I borrow a car from a family member, but I pay for petrol and some of the maintenance and servicing.

Having done some research, I found the following in the now-archived version of the Business Income Manual:

"BIM47701

It is not necessary for a person who claims mileage rate basis to be the legal owner of the vehicle. All that is necessary is that the taxpayer claiming the expense is paying the costs of running and maintaining the vehicle."

This is not included in the newest version, and I cannot find any reference to ownership, so I would like to know if I would be able to claim the allowance or not?

Many thanks in advance

PS - I've included the tag 'company car'... I know it's not strictly-speaking a company car, but it was the closest I could find!

Replies (5)

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By Accountant A
26th Jan 2018 17:33

Was the borrowed car insured for use in your business? That would be quite an unusual policy, I would have thought.

If you pay them for the use of the car then they are hiring the car to you for your business use which, again, I would have thought was well beyond any standard car insurance policy.

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Replying to Accountant A:
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By twig
26th Jan 2018 17:57

Hi Accountant A,

Thanks for your reply.

I am a named driver on the insurance, and I am a sole trader so the business name is my name.

I don't pay for the use of the car per se, but I help out by paying for some servicing and MOTs (which I was doing before I started using the car for the business), as well as petrol when I use the car.

Thanks

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Replying to twig:
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By Accountant A
26th Jan 2018 18:29

twig wrote:

I am a named driver on the insurance, and I am a sole trader so the business name is my name.

I understand that but the question is whether you are using the car for a "social, domestic and/or pleasure" trip or a business trip. That's a question of fact. In both cases you may be the driver but one type of journey is SD&P (and so likely within the conditions of the policy) and the other a business trip (so probably not). To take the point to an extreme, if you chose to drive the car on a race track, you would still be driving but that policy wouldn't cover that use, I can guarantee that.

twig wrote:

I don't pay for the use of the car per se, but I help out by paying for some servicing and MOTs (which I was doing before I started using the car for the business), as well as petrol when I use the car.

It's a moot point, I suppose but I would certainly suggest that you check with the insurer whether your use is indeed within the terms of the policy. I'm sure you are aware how serious it would be if you were found to be using the car outside the terms of the policy.

With insurance, always assume you are not covered for a specific loss unless you have checked that you are. I'm guessing that you haven't checked and I would be surprised if you were covered for business use.

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By twig
26th Jan 2018 18:46

Thanks again for your response.

Good point about the insurance, and I will check with the insurer what is their policy on it.

For the moment though, I'd like to understand the implications for the simplified mileage expense claim, and whether HMRC would accept such a claim, even if the vehicle is not owned by me.

I'm just wondering if anyone has encountered this before, or could point to some guidance that would clarify one way or another?

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By possep
27th Jan 2018 17:14

I would get an accountant if I were you. You cannot claim trips for visiting property under AMR, only the business % of the actual costs. Look on HMRC's website.

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