New client is a sole trader. He wants to claim cost of vehicles rather than mileage. He has 3 vehicles that he uses for work (car for visits to clients, motorcycle to travel to jobs as it's cheaper than the car, 4x4 for towing things when he needs to) and doesn't use any of them much for personal as he is working most of the time. Can he claim costs for all 3? He also wants to claim capital allowances for all 3. Are there any rules for how many vehicles you can claim for?
You would have to disallow the private % for all vehicles. And I would be very careful if he is VAT registered. You would have to put fuel scale charges in for all vehicles, and I am not sure how you would deal with the VAT on repairs? Common sense says only claim the % of VAT to match the % of business use - easy to say but harder to implement!
Have you suggested giving him a comparison of mileage claim compared to business % of total costs?
My query on this would be (and I am having an issue like this myself at the moment) is:
If a person uses 3 cars and wants to claim mileage, do they only get one lot of 10k miles at 45p?
I have recently noticed the absurd rule that once a persons income hits the VAT limit, they can no longer claim mileage allowance?? Why is this?
If anyone has more knowledge on all this, I would really like to hear
its not actually the VAT limit or anything to do with VAT registration but the VAT limit is used as a handy indicator of the level at which things change.
it's an idiosyncracy only applicable to sole traders and partnerships, not limited companies.
Its also not an accross the board rule as the actual rule is that they lose the ability to use mileage on change of car after they hit the VAT threshhold, not when they hit the VAT threshold.
So, you could have someone on £100k claiming mileage in their old car and someone on £80k in a new car where mileage is not an option.
There you go, yet another reason to incorporate.
kind regards,
Shaun.
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Shaun
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.
Hi Shamus, thanks for your response. I understand the VAT limit is just a nice tidy line to work to, and that mileage can continue until they sell the car.. I just dont understand why mileage can't just always be claimed, at any income level? Why did HMRC decide this? Was there a reason? I have actually never heard of this limit until just recently, but then most of my sole trader are below the limit and anyone above has incorporated.
Thanks for those replies. He's not VAT registered. He wants to claim costs as he had a lot of repair costs and it will be more than mileage.
It sounds like you will have to separate the costs of each vehicle, and then work out the business percentage on each, and disallow the rest... same goes for capital allowances
Just a quick secondary point. Motorcycles, after 2009(from memory), are classed as plant and machinery, and therefore vat on the bike should be claimable (like a van) ( http://www.hmrc.gov.uk/vat/sectors/motors/what-is-car.htm#2 ). Also first year allowances for income tax are different.
Tut, saw you more as a Harley girl foxy... Must say that I'm disappointed.
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Shaun
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.
So I'll take the Son of Anarchy box set off your Christmas pressie list then Bill. (only seasons 1 & 2, it went downhill after that (more a family drama rather than about the club so much)).
Years ago I had arranged with a freind in the office that we were going to go and hire a couple and do the East to West coast of the states but it never happened.
I recently saw wild hogs and thought, yep, thats exactly what we would have been like. A couple of middle aged old rockers pretending to be something that we were not.
Maybe when I retire before retreating to the Thai Beach condo (now on hold after seeing The Impossible on DVD) I may yet grow the beard and hair again, don the old jacket and a pair of Raybans and potter accross the states... Its good to have a to do list even if non of it ever actually gets done.
Bit like this pile of paperwork in front of me....
-- Edited by Shamus on Saturday 1st of June 2013 01:26:27 PM
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Shaun
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.
There does not appear to be any restriction on what the bike is. It does not fit HMRC definition of a car, so anything goes, as far as I am concerned
Definately not a Harley fan but it must be my age, as sports bikes dont do it for me as much as they used to. I had a dalience with a Suzuki Hayabusa but even though I am too old to die young, it felt like I might get to the next world too quickly.
My next car is going to be a BMW GS1200 but I might be tempted to roll over it for a K1600GTL
Maybe it's because I have always liked off road machines (Series II Land rovers etc), and did some MC trials events when younger. Also like the idea of going off piste, if I want to. Mind you the current state of the roads, i feel like I am off roading most of the time
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.
