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Post Info TOPIC: Mileage vs Accual costs
Silly Digits


Senior Member

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Posts: 200
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Mileage vs Accual costs
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Hi all

Sole trader under 82K

trying to work out what would be best for a client.

Always used the mileage rates, but my client has now changed the van, so just want to check that this is still the best method.  100% used for business.

mileage is usually about 25k miles per year.

cost of new van £12000.00 (part on HP) plus 2K finance interest.

actual costs - fuel/insurance/tax/repairs etc is around 4K

I am aware that 100% AIA could be claimed for the 12K van this year, so would reduce the tax this year, but really need to work out over the longer term.

Any advise on how to calculate would be great, thanks

 

 

 

 

 

 



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FoxAccountancyServices


Expert

Status: Offline
Posts: 2021
Date:
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Hi Silly

Assuming the full personal allowance is used, and tax is 20% and NIC is 9%...

Mileage = 10k @ 45p + 15k @ 25p

£8250 =

tax saving @ 20% £1650
NIC saving @9% £743
total potential tax reduction - £2393 per year


Car costs =

£4000 = £800 + £360 - potential tax reduction £1160 per year
£2000 HP interest = 400 + 180 = 580 on the whole
£12000 AIA = £2400 +£1080 - potential tax reduction £3480, on the whole


4 years assuming rates don't change -

Mileage £9572
Car costs £8700

Part ex value will need to be taken into account when the vehicle is sold on.



Ps.. please put your first name in your signature :)




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