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30th January 2020

Are you using your own car for business trips? If yes, this guide will explain what you can claim through your limited company.

Similarly to other business expenses, claiming mileage costs reduce company profits, and in turn, the corporation tax liability. But what do you need to look out for when claiming?

Who can claim mileage?

As a company director, you can claim an HMRC approved mileage allowance directly from your company in the form of reimbursement. If you have any employees they can also put a claim through the business expenses system you use.

Whether you use a bike, a motorcycle or a car, it has to be your own vehicle to be able to claim as there are different rules apply to company-owned vehicles.

What can be claimed?

The HMRC approved rate for passenger cars is 45p per mile for the first 10,000 miles and 25p after. The rates are lower for bicycles and motorbikes as per the table below.

From tax year 2011 to 2012 onwardsFirst 10,000 business miles in the tax yearEach business mile over 10,000 in the tax year
Cars and vans45p25p
Motorcycles24p24p
Bicycles20p20p

The reimbursement amount you receive from the company should cover not only the petrol but the maintenance and wear and tear of your vehicle.

What records are required for evidence?

It is advised that you keep a log of your business trips. Make sure to include the start and the end destination with the date and the number of miles driven.  It is also advisable to keep the fuel receipts as part of your records.

What about VAT?

If your company is registered for VAT on the standard scheme then there is some good news as you can claim a small percentage of the mileage back on your tax return.

We are not going to bore you with how the VAT on the mileage allowance is calculated, your accountant should work it out for you when preparing your VAT return.

How do you claim mileage if you are a MyAccountant client?

Thankfully all our clients get access to the brilliant cloud accounting software from FreeAgent, where they can record their mileage using their PC or the mobile app.

Every detail of the business trip can be recorded so your account will double up as a mileage log. The VAT on your mileage is also automatically calculated, so it’s never forgotten.

Making the same trip every week? No problem, you can set up a recurring entry on your account.

Visit this handy link to FreeAgent’s guide on how to record mileage.

We hope that this information helps and if you’d like to read more top tips and guides from MyAccountant, please visit our blog page.

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If you’d like to discuss what MyAccountant can do for you, please feel free to call us for a chat on 0800 917 9100 or e-mail info@myaccountant.co.uk

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