Travel costs/fuel

[Maslins]

So back to the question, are we saying that the rates on that page are the correct ones to use when working out how much of the 45p the ltd should be able to claim tax back on?

Yes. I think HMRC's commentary re it only being for company car owners is just to avoid less well informed people with personal cars mistakenly only using those lower figures for the total reclaim, rather than the 45p.

[malvolio]

It's sa tiny amount anyway, but I always took the view that since I am reclaiming the mileage costs personally - on the not unreasonable basis that it's my money paying for it all, not the company's - then I am not VAT registered so can't reclaim any VAT anyway. And since the annual recoverable VAT in my case was around £480 a year but I got all my costs* back into my bank account, and since the VAT charged on my services to the client were well above that level so I was returning it all to the revenue, I wasn't really bothered anyway.


* Come to that, fairly recent RAC figures put the cost of a car like mine at £0.65 a mile anyway...

[Craig@Clarity]

OP has it right. They claim the mileage back from the company. The company claims the VAT on the mileage expenses. Quick calc is to take the advisory fuel rate and multiply it by the mileage claim. The VAT element is 1/6 of this. If you're looking for a formula it's (AFR x mileage)/6 = VAT element.

In Xero, create a bill for mileage using two lines. The first line is the AFR as the unit price and the quantity is the mileage. Apply the tax rate as 20% VAT on expenses.

The second line is the non VAT element with a tax rate of NO VAT.

[Snarf]

OP has it right. They claim the mileage back from the company. The company claims the VAT on the mileage expenses. Quick calc is to take the advisory fuel rate and multiply it by the mileage claim. The VAT element is 1/6 of this. If you're looking for a formula it's (AFR x mileage)/6 = VAT element.

In Xero, create a bill for mileage using two lines. The first line is the AFR as the unit price and the quantity is the mileage. Apply the tax rate as 20% VAT on expenses.

The second line is the non VAT element with a tax rate of NO VAT.

Thanks for confirming, that's what I had been doing but the next text on the gov site made me question it!

I'm only doing 600miles a quarter at the moment so it's not a large amount, but I was doing 600+ a week before lockdown so if I'd been doing it wrong it would have been a bit of a mess to fix!

[ASB]

There is also a question as to whether it is worthwhile claiming from the company at all.

If you don't you can claim the difference between the AMAP rate of 45p/25p and what is actually paid against your gross income via SATR.

It is possible in a few cases that this yields a greater saving than the saving the company may make on it's CT.

If you are outside IR35 and a non basic rate taxpayer it may yield a modest saving if you income is predominantly from dividends.

Whether it is worth the time and effort is a different matter.