Business Mileage Rate - 25p/40p

[malvolio]

Im sure a lot of your forget that if you claim £300 a month towards mileage from your company that is £300 less dividend you can take.

All you are really saving is the tax element of the dividend, 21% or the higher rate.

So when you now say £63 a month, who can run a car on that? That doesnt even cover 3/4 of my diesel.

Ever hear of Corporation Tax...?

[Sockpuppet]

Im sure a lot of your forget that if you claim £300 a month towards mileage from your company that is £300 less dividend you can take.

All you are really saving is the tax element of the dividend, 21% or the higher rate.

So when you now say £63 a month, who can run a car on that? That doesn't even cover 3/4 of my diesel.

Yes you save 21% on the £300 which is only £63 "saving". However for those of use that only pay up to the higher rate tax bracket and leave the rest in the company I can get another £6000 out of the company a year in mileage payments. Which means I can div upto £37k but also get £6k "tax free" so £43k total.

Also as I have a student load I don't pay the repayment on the fuel but do on divs.

[TykeMerc]

Im sure a lot of your forget that if you claim £300 a month towards mileage from your company that is £300 less dividend you can take.

All you are really saving is the tax element of the dividend, 21% or the higher rate.

So when you now say £63 a month, who can run a car on that? That doesnt even cover 3/4 of my diesel.

£63 is only 157 miles @ 40p/mile, if you're using £90 worth of fuel to do 157 miles then you might want to get your engine looked at, possibly check for a hole in your fuel tank or stop using a WW2 halftrack for business mileage
My car is far from being the most efficient diesel on the road, but I get around 600 miles from £90 worth of fuel which is £240 @ 40p and £150 @ 25p.
I'm at a loss to understand your thinking or your figures.

[escapeUK]

Ever hear of Corporation Tax...?

Yes, have you? Its the 21% tax I referred to.

I'm at a loss to understand your thinking or your figures.

You arent the only one. I say again. If you hadnt claimed the £300 in mileage, you would have still got that money as dividend. By claiming it as mileage you escape the £63 (approx) tax that would have been the corporation tax payable on the £300.

So in actual fact all you are getting extra is £63.

Sockpuppet has grasped my point, and I am doing exactly what he says. Yes there is a tax saving, but its the corp tax, whether that be 21% or 32.5%.

How does 21% of 40p sound, is that paying for your fuel? It doesnt pay for mine.

[TykeMerc]

Nope I wouldn't have got the money as dividend, it would be sat in the business account and I'd have to pay tax on it as a profit. I only take dividends to the 40% tax margin, the rest stays in the business. Until it's drawn from the business it doesn't belong to me, the money belongs to the business.

I run a car and I use it for essential business travel, the 40/25p per mile regime covers my fuel costs and contributes to the running of the car although obviously a lot less than it used to.

[escapeUK]

Nope I wouldn't have got the money as dividend, it would be sat in the business account and I'd have to pay tax on it as a profit. I only take dividends to the 40% tax margin, the rest stays in the business. Until it's drawn from the business it doesn't belong to me, the money belongs to the business.

I run a car and I use it for essential business travel, the 40/25p per mile regime covers my fuel costs and contributes to the running of the car although obviously a lot less than it used to.

I dont think you grasp the concepts do you, never mind. Ignorance is bliss.

[VectraMan]

I dont think you grasp the concepts do you, never mind. Ignorance is bliss.

What you're saying is, it's an expense. And like all expenses you're only better off to the tune of the tax you would have paid. When I started I was actually very slightly better off doing 200 miles a day than if I'd lived nextdoor to the client, but that was because I was with an umbrella and so paying 40% + NI + E'er NI and the tax saving was more than the petrol. I ruined it by going Ltd.

I used to claim back VAT for a while too, though the mountain of receipts did become a PITA. With today's prices and VAT, I'd have probably been better off on the last gig if I'd dropped out of the FRS and done it again.

Also remember that if you're going to claim business mileage expenses, then you probably ought to have business use on your car insurance.

[SorenLorensen]

I dont think you grasp the concepts do you, never mind. Ignorance is bliss.

Emm, I think he does get it. As far as I can see, it's you who's missing the point of taking it as an expense rather than as a dividend.

[MarillionFan]

Open ended mileage.

You can reclaim the VAT element of the petrol in the 40p per mile, you just need to keep a vat receipt to cover the correct amount. Use the fuel rates here to see what you can claim: HM Revenue & Customs: Company cars - advisory fuel rates from 1 December 2010

Currently around 3p per mile. I do 10,000 business miles a year so another £300 a year for me. It is quite a hassle to keep that many business receipts but for many contractors that is another days pay and doesn't take a day to organise.


Almost always better to do 40p/25p per mile claiming than anything else if you do decent mileage and have a car that doesn't cost near that to run.

Cheers SP. I'm not sure I follow the supplementary part of the mileage you have added.

I basically do all my own book-keeping these days and so as part of the LTD for contracting I am now doing mileage as opposed to training it before for a number of years. So I'm just getting the hang of it.

So to keep simple as a calculation(and for bookkeeping & Vat purposes)

If I do 10000 miles this year in mileage, thats 10000 * 0.40 = £4000. Got that. Cheque payable to MF = £4000

A) If I also keep all of the petrol receipts(which I do anyway) are you saying that I can also claim the VAT back on that. So the cheque to MF is always £4000, but in my book keeping the amount for
mileage is (based on 20% VAT)

Mileage £3333.33
VAT £666.67
Total £4000.00

b) or is that HMRC page you have referenced used to calculate the VAT part(and if so, based on >2000CC car with Petrol) what would the bookkeeping for vat purposes be?

Which one is it?

MF

[Sockpuppet]

Cheers SP. I'm not sure I follow the supplementary part of the mileage you have added.

I basically do all my own book-keeping these days and so as part of the LTD for contracting I am now doing mileage as opposed to training it before for a number of years. So I'm just getting the hang of it.

So to keep simple as a calculation(and for bookkeeping & Vat purposes)

If I do 10000 miles this year in mileage, thats 10000 * 0.40 = £4000. Got that. Cheque payable to MF = £4000

A) If I also keep all of the petrol receipts(which I do anyway) are you saying that I can also claim the VAT back on that. So the cheque to MF is always £4000, but in my book keeping the amount for
mileage is (based on 20% VAT)

Mileage £3333.33
VAT £666.67
Total £4000.00

b) or is that HMRC page you have referenced used to calculate the VAT part(and if so, based on >2000CC car with Petrol) what would the bookkeeping for vat purposes be?

Which one is it?

MF

No worries. Its b.

So 10000 x £0.40 to MF = £4000. That is sorted and correct.

You have a 2000cc Petrol car so fuel element is: 15p per mile (changed every 6 months, next change march 1st).

So 10000 x £0.15 = £1500

VAT on £1500 is £300.

You only need to keep £1500 worth of petrol receipts, not receipts for all the fuel you buy.

As for recording it if you use sage or another accounting program I'd do 2 entries.

£1500 Fuel Element Of Mileage @ 20% VAT
£2500 Non Fuel Element of Mileage @ 0% VAT

otherwise just do £4000 with vat of £300 = 7.5% VAT. You could do that if you used an accounting program but it'll probably winge if the vat is not 0%, 5% or 20%. Also good to show what fuel element of miles claimed is.

Sockpuppet