Making mileage out of your income tax claims

BARRY KERNON, from accountancy firm HW Fisher, the SJA’s auditors, looks at how freelance journalists can better manage their car use when it comes to completing their tax returns

There are two methods self-employed journalists can use for claiming car expenses on their tax returns.

Tax returnsMethod one is to record all the car costs, including petrol, road tax, insurance, repairs, servicing, finance charges, road tolls, parking, congestion charges and so forth and then claim the appropriate percentage of business use. Under this method it is necessary to keep a record of total and business mileages; year-end odometer readings are sufficient to establish the total mileage.

A claim can also be made for a similar percentage of the depreciation of the car, known as capital allowances. The percentage claimable depends upon the CO2 emissions of the car.

Method two is to claim a mileage allowance. This is currently 45p for the first 10,000 miles and 25p thereafter.

It is necessary to record only business mileage and possible, in addition to claim for parking, road tolls and finance charges.

This option is only available to journalists whose gross earnings were less than the VAT registration limit (currently £81,000) in the year the car was acquired. It is only possible to change from one method to the other in the year the car is changed.

For journalists who are employees, and whose employers pay them a mileage allowance, they can claim 45p per mile for the first 10,000 miles and 25p thereafter, as is the case for freelance journalists. The claim is made on the employment pages of the tax return.

A taxpayer may also claim 5p per passenger per business mile for carrying employees or associates on journeys which are also work journeys for them. This applies to both employed journalists and self-employed journalists who use the mileage basis.

Different mileage rates are chargeable for the use of motor cycles and bicycles.



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