Claiming Fuel Expenses If You’re Self Employed

If you’re self employed and you use your own vehicle for work journeys, you are able to claim these expenses as a tax allowance.

Whether you use a van, cycle, motorcycle or car as part of your work, you can deduct the cost of using your car for business purposes from your earnings. Our guide explains how.

Usage of the vehicle must be for work

One of the main criteria for being able to claim fuel expenses is that the journeys you are making must be essential for your business. For example, if you make deliveries to customers or you travel to people’s houses as part of your job then these would generally be classified as ‘work journeys’.

What fuel expenses can you claim?

The amount of fuel expenses that you can claim depends on the type of vehicle that you use. HM Revenue and Customs (HMRC) publish a list of ‘mileage rates’ for each of three types of vehicle. The rates as of May 2011 are:

• Car or van – 40p per mile for the first 10,000 miles and 25p per mile thereafter
• Motorcycle – 24p per mile
• Bicycle – 20p per mile

You are able to claim the number of miles you have travelled in the course of your self employed business by the fixed mileage rate for the vehicle you have used. For example, if you have made 2,000 miles of business journeys in your van in a tax year, you would be able to claim fuel expenses of £800 (2,000 x 40p).

There is a maximum amount of tax relief that you are able to claim in one year, even if your travel expenses exceed this amount. You can find details of these limits through the HMRC website.

What records should I keep?

As with other business expenses, it is important that you keep records of the business mileage you have undertaken and whether this has been in a car, van, bicycle or motorcycle.

At the end of the tax year you will need the figures in order to calculate the amount of fuel expenses that you can claim. You will have to enter these figures on your Self Assessment tax return and so you should keep records to back up your claim. HMRC may require to see proof of your business mileage when assessing how much tax you are liable for.

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