It’s Tuesday!
The perfect day to talk Tax.
Read this week’s short Tax snippet for doctors and dentists, to help you save money and get more organised with your tax affairs. It’s just to give you a flavour – in fact, you can read it whilst the kettle boils for your morning coffee!
The method of claiming mileage or actual expenses
Using the mileage claim method to claim tax relief on travel expenses, is significantly more straightforward than the alternative of recording actual expenses. When preparing a mileage claim, you are able to claim 45p for the first 10,000 business miles and 25p thereafter.
It is important to remember, travelling between home to work doesn’t classify as business miles.
The alternative method is the cumbersome job of retaining and recording all receipts when claiming tax relief on actual motor expenses.
Which method is best to maximise tax relief?
Often, mileage can work out the most effective method. However, it very much depends on the cost of your car and how expensive it is to run.
For example: You own a sports car which you use 80% for business. Each year your total costs are £10,000 and your business trips total 10,000 miles.
Here, although it is more time consuming to use actual costs, it is possible to claim an additional £3,500 by using this method.
- Using mileage your tax relief claim would be £4,500, based on 45p per mile for 10,000 miles.
- Using actual expenses your tax relief would be £8,000, based on 80% of total costs.
- It is also possible to claim a capital allowance on the capital cost of your car.
Getting a review by a professional accountant will give you both options and ensure you are claiming the most tax relief possible.