When you’re running a company, figuring out how to handle car costs is vital to get right. In this post we break down the two main ways to claim car expenses: using your own car for work trips, or driving a company-owned vehicle.
Personal Car Mileage Allowance
So, you’re using your personal ride for business journeys? You can get back a fixed amount per mile to cover these trips. For 2024, you can claim 45p for each of the first 10,000 miles and 25p per mile after that. Remember, this only covers trips that are all about business – your everyday commute doesn’t count. The best part? You don’t need to keep tabs on every penny spent on your car, just the miles you travel.
Company-Owned Vehicles
If your wheels are owned by your business, you can claim the whole shebang – fuel, repairs, insurance, the lot. But here’s the kicker: if you also use the company car for your own journeys, that could be seen as a perk by HMRC, and you might need to pay tax on it. How much tax depends on the car’s value and how much it pollutes. If you go down this road be sure to run all the calculations past your accountant first before committing to making any vehicle purchases.
What’s the Difference?
- Taxes: Using your own car for business doesn’t attract extra taxes, but personal use of a company car might.
- Paperwork: Claiming for your personal vehicle mileage is a breeze—just track the business miles within your accounting and bookkeeping software. Got a company car? You’ll need a full log of the cost, so again do make sure to record these correctly.
- Fixed Rates vs. Actual Costs: With mileage, you use HMRC’s set rates. For company cars, you claim the actual costs, which means keeping every receipt.
Keeping Things Tidy
No matter which route you choose, keeping good records is key. That means logging every business trip if you’re claiming mileage, or all costs if it’s a company car.
Deciding between using your own car or a company car for business comes down to how much you use the vehicle for work and how much paperwork you’re willing to deal with. Each option has its perks so always check these with your accountant before making any decisions.
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