Van repairs and claimable expense or Not??

[Greener]

Hi All,

I have a question for ya, I was advised to go down the pence per mile route with regards to running my van and doing my tax return, as far as I can understand it I have to keep a mileage log business/private usage and can then claim the business miles @ 45p per mile as an expense? And in doing this I can't claim anything related to the van ie services, brake pads/discs ect? But what about major repairs??? in the last 3 months I have had to spend out a fair wedge on a new clutch, a wiring repair to the main engine loom, and just this week had to have the alternator replaced :-( :-( total cost for all three just shy of £1200 :-( can any of you boys enlighten me as to what you do regarding claiming for your van running costs and do you think I can put these major repairs as an expense?? Thanks in advance Greener

P.S if this isn't in the right section please can @Gav put it where its best to be read

 

[Green Pro Clean Ltd]

You get 45p per mile for the first 10'000 miles then 25 per mile there after so if you do 20'000 miles per year ten you have £7'000 of 'NON TAXABLE' income.

People often use the words 'tax free' or 'claim back' but you aren't actually getting anything back, you are just not paying tax on that money.

Example: You earn £20'000 for the year.

Your personal tax allowance (usually) is £10'600

You did 20'000 miles so that's £7'000 (you could have used on maintenance and fuel, does not matter what you used that £7k on, that's your mileage allowance and you don't need to prove a thing other than the mileage log if asked, even if you only spent £2k on the van makes no odds, the mileage is tax relief on income)

So that leaves £2'400 they can tax you on for the year.

At a typical 20% that's a total tax liability of £480.

This means your total tax liability to the HMRC is just under 2.5% for the year.

Now dont forget all the other tools, business cards advertising you paid for for the year. Run your books properly and you will probably walk away with a tax liability of zero.

I only run the one van, if questioned about personal use, I do perhaps 1'000 miles a year for personal, all my Tesco runs are on the way home from a job and I have to pass the store to get home anyway. If going to town we will probably dine out and have a couple of bevvies so will take a bus or cab so personal mileage is really very minimal.

I will be buying a new car in the new year, but that's just a treat as I work hard and deserve it, but if I use it to go do a quote the mileage will be logged and claimed for under expenses.

Bear in mind all the above is just an example, I am not a qualified accountant and I choose to pay a qualified accountant a reasonable fee so I don't need to give my cash to the tax man.

But now you all realize that you could pay as little as 2.5% or even zero tax per year are you going to start keeping proper books?

 

[Greener]

Thanks @Green Pro Clean Ltd I knew I could rely on you for an informative answer :thumbsup: I have what seems to be a quite compact round and am only likely to do around 6.5-7k business miles this year so around 3k non taxable income regarding van usage? So am I right in thinking I'm only benefiting by not paying the 20% tax on the 3k? £600? What with fuel costs, servicing, insurance and road tax not to mention the major repairs I've just paid out on it looks like I might be on a lose, lose situation? Due to the fact I don't do many business miles :-(

 

[Green Pro Clean Ltd]

Yep, you got it, but also be aware if you go the mileage route now for that vehicle I believe you are stuck with that option only ongoing as long as you own that vehicle.

If you claim for the expenses route then you are stuck doing that.

Best advice is go see an accountant, all small business accountants will do a half hour free advice whilst hopping to sign you as an client.

Mine is a more complex situation due to our investments etc so I keep my accountant on the books at £120 per month but if you need it just for your end of year you shouldn't pay more than £150 for their services.

 

[Greener]

I suppose the reality is: benifit £600 and I look at my true running costs (excluding the major repairs) before the 45p per mile mechanism: £980 fuel bill (14p a mile), £300 insurance, £225 Tax, £300 miscellaneous, total £1805 minus the £600 benifit my actual out of my pocket expenditure is £1205 a year or £100 a month? I knew those FG&S cleans were good for something /emoticons/tongue.png

 

[Green Pro Clean Ltd]

The reality of it is there is not enough Mary Jane on the planet to make me this interested in accounting /emoticons/tongue.png