I am assisting a friend with her first years tax return and I wondered if someone could cast their eye over my Miles v Fuel workings (including capital allowances for the car) and advise me if I am on the right lines?
You cannot claim capital allowances if you are claiming mileage rates. Mileage rates are total compensation (excluding tolls and parking) for using one's own vehicle.
Also, you do not state whether your client is self employed or incorporated as the calculations are different (I've yet to find a limited company where the director would not be better off claiming mileage).
Also, if self employed what is the clients turnover as mileage rates may not be available for them (as an easy reference the availability of claiming mileage rates for the self employed is restricted to turnover being less than the current VAT registration limit (for FA13 that would be £79k and FA14 is £81K).
Worth noting that if it is likely that business miles will increase dramatically that could change the best advice but once Capital allowances have been claimed you cannot change the method changed until you change the car. So just something to bare in mind that you are looking into the future, not just the past when helping a client make this decision.
kind regards,
Shaun.
__________________
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.
I would question why the insurance was so low at £13.75.
Also, as you have the miles travelled. Google an MPG figure and fuel cost average (say about £1.30p), you should be able to work out a better estimate of fuel costs than £20 per week. Some of the motoring bills may have a total mileage figure on them for you to extrapolate an annual if necessary. Might not make a lot of difference to your result in this case.
Tim, the insurance is an error, that is one month (it should be 165.00 for the year).
I take on board what you say about the fuel cost (I have no actuals from my friend as yet). The fuel cost is £262 for 1552 miles.
And thank you for your response
Sue
Shaun,
My friend is a self emplyed childminder. Her route & mileage is not likely to change / increase as she does the same route to school & return each day.
So the miles is simply 1552.4 miles x 45p - 698.58
Am I correct in thinking that the fuel method would be more beneficial here as the childminder does limited miles?
One other query, would I deduct 25% for personal use on the fuel cost if i worked out her actual fuel cost based on her business miles, rather than putting down the actual total fuel cost and making the personal use decution?
Thanks again
Sue
-- Edited by Plover on Wednesday 10th of December 2014 02:16:46 PM
-- Edited by Plover on Wednesday 10th of December 2014 02:18:13 PM
Am I correct in thinking that the fuel method would be more beneficial here as the childminder does limited miles?
One other query, would I deduct 25% for personal use on the fuel cost if i worked out her actual fuel cost based on her business miles, rather than putting down the actual total fuel cost and making the personal use decution?
Thanks again
Sue
Hi Sue,
Your presentation is neat and tidy but in the profit computation I wouldn't break down into each item of expenditure. Separate Fuel and Motor Overheads is usually convenient though.
One way is to start with your Net Accounting Profit at the top then list the gross of each type of expense which you're going to apportion below to the left; then your add back / private percentage in the next column and the total of the add back for that expense to the right of those.
You would not add back anything further above and beyond the private element.
I'll let you or anyone decide which method is more beneficial but just say that the capital allowances will, of course, reduce each year until the asset is renewed.
Can I just ask a tiny question about the capital allowance rate, wonderful people? I don't do a lot of sole trader's any more, and the few I do, have vans... but a client has just landed who has a car. Its 143 CO2 rating, and so when she bought the car in 2012 it was under the 160 threshold.. now I am about to do her 2014 return, and I just want to double check.. even though she bought the car when the 160 threshold was in, I now have to reduce the CAs to 8% - that's right isn't it? There's no rule that allows you to keep the higher rate based on the time you bought the vehicle, is there?
I've questioned this myself and the answer I found was that it is indeed reduced to 8%. The only temporary let out is a hybrid rate where the Special rate changes and the year end is other than the fiscal year.
It was just with the HMRC website pointing out that the threshold was 160, I wondered if it meant something.
I do hate the new gov.uk website.. everything is so big, you have to keep moving from page to page to find anything! The small text on the HMRC website was much easier reading!
There are complaints on Aweb michelle not just about the poor font / layout which seems to assume that everyone looks at the site on a mobile phone, but also that the content is often incomplete, insufficient and occassionally incorrect.
I feel that the approach being adopted by the site is a sad reflection of what it's owners feel the mental capacity of their client base is.
.... From the people who dumbed down the education system now get Peter and Jane do tax!
__________________
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 are complaints on Aweb michelle not just about the poor font / layout which seems to assume that everyone looks at the site on a mobile phone, but also that the content is often incomplete, insufficient and occassionally incorrect.
Yep, spotted an error on .gov about a week ago (not finance related from what I recall) Perhaps its been written by "a mate down the pub"
