I have a client - sole trader, who is currently claiming mileage at 45p per mile. He now wants to lease a vehicle, possibly with option to purchase at end of term.
My question is, would he be able to claim the business element of the lease on his SA and also claim the mileage allowance ?
-- Edited by Shamus on Tuesday 24th of February 2015 04:57:43 PM
__________________
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 had looked on HMRC site and found this regarding 45p per mile on BIM75005
`Costs covered by the mileage rate
The mileage rate covers the costs of buying, running and maintaining the vehicle, such as fuel, oil, servicing, repairs, insurance, vehicle excise duty and MOT. The rate also covers depreciation of the vehicle.
Costs not covered by the mileage rate
The mileage rate does not include incidental expenses incurred in connection with a particular journey, such as tolls, congestion charges and parking fees. These will be allowable as a deduction where they are incurred solely for business purposes.
The business proportion of the finance element of a hire purchase or finance lease may also be claimed as a deduction.`
After reading your reply and the above extract from HMRC, I am a little confused.... or have I been working too hard lately to make sense of this ?
From 2013/14 BIM 75005 supersedes previous guidance (thanks Julie).
The rules over VAT limit restrictions on use of mileage have been removed.
The business apportionment of the finance element of finance leases is (as indicated in BIM 75005) allowable.
As previous if Capital allowances have ever been claimed the mileage allowance is not available.
So, the options are :
Capitalise and depreciate through the books, treat the finance costs (i.e. interest) as an expense, claim mileage allowance for business usage. Do not claim capital allowances on the vehicle (and as always add back the depreciation in the tax calc).
OR
Capitalise and depreciate, expense finance costs, run the car expensing business applicable running costs, claim capital allowances for business apportionment of car.
The combination that you can never have is capital allowances and mileage allowance which makes sense as the mileage allowance includes an element of depreciation so to allow such would effectively be giving tax relief twice.
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.
