Self Employed Individual - Use of own car for business purposes.

Where self employed individuals use their private car for business purposes they are able to claim expenses from the business to compensate. In order to claim motor expenses from the business any relevant journeys must be wholly and exclusively for business purposes.

There are two methods via which motor expenses can be claimed:

1. The individual must keep detailed records of all expenditure incurred in connection with the motor vehicle along with a detailed record of all business mileage travelled. They can then claim the relevant proportion of expenditure in line with the proportion of business mileage to total mileage.
2. Alternatively the self employed can use the approved mileage allowance (AMAP) rates to claim a fixed rate per business mile travelled. This method is only available if the annual turnover of the individual's business is less than the VAT Registration threshold (currently £64,000 - If this is reached once the approved mileage allowance rates have been used then the mileage rate should continue to be used until the vehicle has been replaced).

What does the mileage rate cover?

The approved mileage allowance rate covers the running and maintenance of the vehicle. Therefore expenses such as fuel, oil, servicing, insurance, vehicle excise duty, repairs and MOT are all covered. The mileage rate also includes an element relating to the depreciation of the vehicle.

What other costs are allowable in addition to the mileage rate?

The approved mileage allowance rate does not include costs that are incurred during specific journeys such as parking, tolls and congestion charges. Parking fines incurred by employees during business travel are also allowable but any parking fines incurred by the owner of the business are specifically disallowable.

How much is the Approved Mileage Allowance rate?

The appropriate Approved Mileage Allowance rates are as follows:-

Cars & Vans
On the first 10,000 business miles per tax year	40p per mile
On each additional business mile	25p per mile
Motorcycles	24p per mile
Bicycles	20p per mile

We hope that you have found this guide useful. If you would like some further advice or assistance please contact us.

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