Mileage v fuel costs
As a business owner, it's likely that at some point you will use your car for business. It could be for those all-important meetings or business events. These are the types of occasions where you can expend your travel.
Mileage claims on your personal car
You claim for either mileage or your fuel costs.However, the trouble with claiming fuel costs is it can often get tricky figuring out the ratio of personal to business expense. Therefore the far safer option, and one which we recommend, is to claim mileage. This is a simpler method and easier to track.This latter method is permitted by the government. Within this calculation fuel, wear and tear and maintenance is taken into consideration. In other words, this can work out to be much more beneficial.
What's excluded
The government does not allow you to claim from a permanent place of work.
What's included
To a temporary place of work- Client meetings- Travel to work sites which are less than 25 months (if the work is to be completed in more than 24 months it will be considered as a permanent place of work and will not be permitted)
How is VAT dealt with
This is calculated within the mileage allowance, by dividing the fuel portion of the mileage expense by 6. This is the amount allowed by the government. It is based on the car's fuel and engine type. You can view how HMRC calculate this here.As will all expenses you must keep all receipts and provide them to your accountant. This is regardless of whether you are using HMRC’s advisory fuel rates.
Mileage making things simpler
There are a number of mileage apps out there that can help you with this. However, as Xero partners, we have identified several apps that work well together. These include Expensify, Mileiq and Tripcatcher. Xero too are developing their own app so it's worth keeping an eye out on this.In conclusion, you can see we recommend tracking your miles over fuel costs to ensure your claims are correct.If you have any questions about expenses or are looking for an accountant then please do contact us.
