If I use mileage allowance and therefore cannot claim for vehicle on tax return as a capital allowance. Do I use the same figure for the accounts or do I use actual vehicle expenses and show depreciation.
Thanks in anticipation
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Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
You need to be consistent with your work, therefore if you are using mileage on your tax return that's what you should be showing in your accounts. I always do the set of accounts first as this makes doing the self assessment easy as you will just be entering figures from the accounts you have produced.
So if I use mileage allowance in the P&L (since this is what will be on the tax return)
Would you not then depreciate the vehicle in the accounts (since cannot claim as a capital allowance)
If not how would I deal with the vehicle as a fixed asset in the balance sheet
Sorry so many questions
__________________
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
You didn't mention that the vehicle was capitalised! Yes you can put depn through too. Don't forget that if a co car the mileage rates differ to that if claiming mileage using a private car
I have just read that mileage is claimed at a different rate if the vehicle is a company car. Could you possibly tell me more please? I have a client who recently purchased a car to use solely for business and is down as a fixed asset. I'm not sure if mileage is the best route for him or to just put MOTs, Repairs and Petrol receipts through..but if mileage is the way forward then what would be the correct rate please? Also, if he did go the 'mileage' route..would i still post parking receipts e.g 60p parking to quote for a job.
Firstly, it is not usual practice to capitalise a vehicle AND claim mileage; the 40p p/m figure is for the running costs of the vehicle and the capital depreciation of the vehicle.
Secondly, Blondie, when the term 'company car' is used, it refers to a car owned by a limited company, which is not the same as a vehicle used solely for business (which could be through a partnership/sole trader business). Could you confirm whether it is a limited company, and if so, that the car was purchased in the company name?
Sorry to sound pedantic, but you will appreciate that it's an important distinction, particularly with the Benefit In Kind which accompanies company cars.
-- Edited by gbm on Monday 31st of January 2011 01:21:27 PM
Oh no worries, my apologies. It is a vehicle for a sole trader (used to be partnership but that has recently been disolved). The car was bought second hand for the business, using funds from the business but bought under his own name (not business name) He is in the construction business so the car takes him all over.
