The cost of car travel mileage for work is an important business expense to deduct from your income and pay tax on what’s left.
But car mileage is one of those expenses that’s easy to postpone. That may be because you need to record how many miles you’ve done, rather than just keeping a train ticket for a receipt.
It may also be because for most self-employed people, motor vehicles will be used for a mix business and leisure. You may, for example, use your car for driving to a client meeting in the morning, visit a friend for a coffee, then go to a work conference in the afternoon and go to the gym in the early evening.
There are two methods for calculating mileage expense claims.
One is to add up all your motor expenses for the year and work out the business percentage – based on the proportion of business miles you do.
The other method is normally simpler. You calculate your car, van or motorcycle expenses using a flat rate for mileage instead of the actual costs of buying and running your vehicle − for example, insurance, repairs, servicing, fuel.
Mileage rates are 45p per mile for the first 10,000 miles, and then 25p per mile.
You can use QuickBooks software for “simplified expenses”. The mobile app has a mileage calculator to track each journey. (This method of simplified expenses can also be used for calculating expense claims for working from home and living in your place of business.)
HM Revenue and Customs’ web site, gives an example.
You’ve driven 11,000 business miles over the year.
Calculation: 10,000 miles x 45p = £4,500
1,000 miles x 25p = £250
Total you can claim = £4,750
You don’t have to use flat rates for all your vehicles. But once you use the flat-rate method for calculating expense for a vehicle, you must continue to do so if you use that vehicle for your business.
You can claim all other travel expenses (for example, train journeys and parking) on top of your vehicle expenses.
Sandra Dowson uses Intuit’s mileage tracker mobile app in QuickBooks, to record car journeys for her dog-care businesses.
“This feature is brilliant,” she says. “It’s something I never used to claim for or think about. Now I can monitor every mile. For [my] Doggy Day Care [business] there will be a daily car run, for example, three calls, then another two calls, [then I’ll] take them off to park, and a walk around green, … Mileage claims could be saving me hundreds or thousands of pounds.”
Another Intuit customer, Lisa Pierce (who runs a jewellery business, called Beanstalk Keepsakes, in Bracknell, Berkshire) also uses QuickBooks’ mileage tracker.
She claims car mileage each week because she drives to appointments with customers. “The QuickBooks’ app on my phone tracks my mileage. I wasn’t doing this before. My accountant suggested writing down the mileage on a piece of paper each time I get in the car. But I never remembered to do it. I tried to recall the journeys I did but I never claimed back the mileage I did.”