Motor expenses for sole traders

I am a sole trader and I do a lot of business mileage. What’s the best way for me to claim back my expenses?

1st September 2014

For unincorporated businesses, there may be 2 options for obtaining tax relief for business mileage:

  • Calculate your actual expenses and then do an adjustment for the percentage of private use
  • Claim mileage for business use provided that you haven’t already claimed capital allowances on the vehicle

From 2013/14 the mileage rules came under the simplified expenses rules and therefore there is no longer a turnover limit for claiming mileage (equivalent to the VAT registration threshold). Most unincorporated business may adopt mileage; irrespective of their turnover or if they are using the cash basis.

Mileage is recovered at 45p per mile for the first 10,000 miles; 25p per mile thereafter. You can claim other travel expenses (such as train journeys) and parking toll fees in additional to your mileage claim.

Once you use the flat rates for a vehicle, you must continue to do so as long as you use that vehicle for your business.

Please note, we have ignored the capital allowances and VAT aspects.

In answer to your question, it is difficult to say which option is better for you without knowing more about the numbers of miles you do and the expenses you incur, etc. The best thing would be to work out your potential claim using both options, and see which is largest. Alternatively, contact your local TaxAssist Accountant who would be happy to review your affairs for you.

By Jo Nockels

Disclaimer: The information provided is based on current guidance (at date of publication) from HMRC and may be subject to change. Any advice shared here is intended to inform rather than advise. Taxpayer's circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this information, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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