Understanding Vehicle Expenses

Ever felt confused about claiming tax back on vehicle expenses? If you’ve ever found vehicle expenses a bit tricky when it comes to tax claims, and you're looking for an accountant in Cambridge or Nottingham to guide you, you’re not alone! This blog will help you understand the different costs involved in owning and running a vehicle—things like fuel, maintenance, insurance, and depreciation.

Two Ways to Claim

When it comes to claiming vehicle expenses, you have two options:

1. Claim per mile driven – Using the standard HMRC mileage rate.

2. Claim a proportion of vehicle costs – The business covers a percentage of your vehicle expenses.

The second option can be a little more complex, as you’ll need to work out what percentage of the costs relate to business use and what relates to personal use.

Types of Costs

Fuel Costs – One of the biggest expenses for vehicle owners. Fuel prices fluctuate, and costs will depend on how often and how far you drive.

Vehicle Maintenance – Keeping your car in good shape is essential. This includes things like oil changes, tyre rotations, and brake checks.

Insurance – A legal must-have for all vehicle owners, whether for personal or business use.

What Can I Claim?

Business Use of Your Vehicle – If you use your vehicle for business, you can claim a proportion of expenses such as fuel, maintenance, insurance, and depreciation. Just make sure you keep clear records of your business mileage and costs.

Standard Mileage Rate – Instead of tracking every vehicle-related expense, you can use HMRC’s fixed rate per mile driven for business purposes. This rate changes annually.

It’s a good idea to calculate your deductions using both methods to see which one gives you the best tax benefit. Once you pick a method, you can only change it if you start using a different vehicle for your business.

What Can’t I Claim?

Personal Use of Your Vehicle – Expenses for personal journeys, like commuting to and from your regular workplace, aren’t tax-deductible.

Fines and Penalties – Parking tickets, speeding fines, or any other penalties can’t be claimed as business expenses.

Understanding vehicle expenses can make a big difference when it comes to managing your finances and tax deductions. If you’re unsure which method works best for you, chat with your accountant, they can help you figure out the most tax-efficient option. You may need to do a few calculations to see which approach saves you the most money! If you need some support, please contact me.

If you are looking for a reliable and personable approach for your business, reach out to me.