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Rules for claiming mileage/motor expenses after going over the vat threshold.

  • Member PM.Dip
  • Practice Licence
  • 14 posts
  • # 81177

I know that self employed people can claim mileage at 45p per mile for business use of their private car.  I also know that these rules only apply until that person's turnover reaches the vat threshold.  But I can't remember what the rules are and can't find any guidance on the HMRC website, can anyone help please?
kjmcculloch
  • 1159 posts
  • # 81186

If a client has chosen a method by which to claim motor expenses whether it's the approved milage rate or a proportion of costs they must continue using this method each year.  They can only change the method when they get a new vehicle.

You're right to say that they can't choose the 45p/25p method when they are over the VAT threshold, but if they are claiming it and go over the threshold they should continue using this method until they change the vehicle.

HMRC have some great webinars covering such topics.  Check their website.

Kris 
  • Member PM.Dip
  • Practice Licence
  • 14 posts
  • # 81203

Many thanks Kris, I'm delighted, this confirms everything I needed to know.  I can meet my client with confidence now!

Susan Fraser 
360peter
  • Member
  • Practice Licence
  • 44 posts
  • # 81237

Here is the link to another post on this forum regarding this.

http://www.bookkeepers.org.uk/forum/Thread.aspx?type=&cid=0&tid=83599&lp=79565&page=1&sort=

I also found this quite interesting as I have been in accounts for many years and never heard of this.

In saying that most businesses that are vat registered usually go Limited, depending on profit levels, and then the employees get the milage allowance of 45p/25p regardless as it is more tax efficent than having your car in the business.

Hope this helps further.
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