Many business owners often ask us: “Can I claim my car mileage as a business expense ?”. This is not only a very frequently asked question, but also a very pertinent one.
Before we proceed, we should make one thing very clear: if you do not have a business vehicle (one that is SOLELY for business use or OWNED by your company), then you can’t claim any expenses such as fuel, insurance, repairs, etc.
In this article though, we will talk about and clarify whether you can claim your car mileage as a business expense.
What mileage can I claim ?
If you have a personal vehicle which you use for business trips from time to time, in other words it used both for personal as well as for business, then you can claim the mileage you’ve done for business purposes. If this vehicle is petrol or diesel, then you can claim £0.45 per mile as a business expense.
Though this may seem like a petty amount, in actual fact it is higher than the cost of the fuel alone, because it is designed to cover wear & tear as well as other vehicle costs.
There are different claimable rates for electric or hybrid vehicles, motorbikes & bicycles, which we won’t go into here… but the principle remains the same – it IS worth tracking your mileage!
The one caveat here is that if you are travelling to and from the permanent place of business, such as the office, or the store if you run a retail business etc, then the mileage incurred on these trips cannot be claimed. But any other trips done for business purposes are claimable ! Business trips may include without being limited to visiting clients, attending networking events, going to the Post Office, travelling to training, etc !
Is there a benefit in tracking my mileage ?
Is it really worth tracking every trip?
Yes, it is indeed worth tracking your mileage. There are at least two ways in which the effort will pay off:
1) The mileage expense that you claim through your business converts to money that the business owes you, as if it needs to pay you for an expense that you purchased on its behalf. This means that this money can be paid to you tax-free.
2) Having an additional expense lowers your business profit, meaning less Corporation Tax if your have a limited company (or less self-assessment if you are a sole trader) to pay!
Basically, this is just a really easy way to get more out of your business and pay less tax!
How should I track my mileage?
We would suggest keeping track in a spreadsheet with the date and distance, or, if you do a lot of trips, there are various apps you can use.
We like MileIQ, but there are plenty out there to choose from so take a look online and find one that suits you.
How can LAS Accounting help you ?
If you’re looking to work with an accountant who knows all the tips and tricks to save you tax, please contact us at your earliest convenience !