If you are self-employed, either as a sole trader or in partnership, and you use a business vehicle for private purposes, HMRC will seek to disallow any motoring costs, petrol etc., and capital allowances based on the purchase cost of the vehicle, to cover the private use proportion.
The only practical way that you can do this is to record your car mileage at the beginning and end of your trading year, to ascertain the total miles for the period, and a log of your business miles.
At a minimum, you should be able to provide evidence of total annual mileage and a detailed record of business mileage for the same period. The log should include the following information:
- Date of the business use
- The address you were attending and the round trip mileage
- The reason for the trip
This could be recorded in a diary kept in your car or by using one of the multitude of Apps now available for this purpose.
Armed with this information, any disallowance of running costs and capital allowances will be fairly based and not some arbitrary figure dictated by HMRC. Estimates will not cut muster with the tax office, you will need to back up numbers with evidence.
If you are employed, have the use of a company car, and your employer pays all of your petrol, including that used privately, then you will be subject to the car fuel benefit charge. The only way to avoid this tax charge is to repay your employer for petrol used privately. To do this you will need to keep a log of all private journeys. At the end of each tax year, or periodically during the tax year, you should multiply the private use miles by the approved car fuel rate – this can be accessed from the HMRC website at https://www.gov.uk/government/publications/advisory-fuel-rates. Just multiply the private use miles by the appropriate rate per mile and pay this amount to your employer.
If you want your motoring costs fairly apportioned for private use, you will need to keep a mileage log.
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