Taxing Issue

[itsmefolks]

I have a small retail business which I started last year. My accountant says I cant claim my petrol against the business takings!!I just dont understand it at all. My van is purchased through the business and so is the insurance, and tax. Does anyone know why the fuel isn`t able to be put against the business??

[factor-fiction]

skyline is our tax expert.
I'd have thought you can claim, but only of course for business related mileage

[itsmefolks]

Thanks for that. Is it not business going to and leaving my place of work?? This is the only mileage I do with the vehicle.

[ummmm]

No...you can't claim to go to and from work (we all have to do that) but you can claim for the business use during working hours.

[gingejbee]

Travel from home to place of business is classed as private, not business, use.

[factor-fiction]

Not sure about for someone running a business but employed people can't claim against tax for cost of travelling to a fixed place of work. So your accountant is probably right

[Buenchico]

Capital expenditure, such as the cost of buying a vehicle, isn't normally tax deductible/ (Only the cost of hiring a van, or the depreciation on one that you've purchased, can be recorded as an allowable business expense).

If your accountant has found a way of offsetting the purchase price of the van against tax, it would seem likely that he's done so under a scheme that allows such an expense instead of the costs of putting fuel into it.

[boxtops]

I agree with the others, none of us can claim for our travel expenses going to and from our normal place of work. If you go somewhere else first thing in the morning, or make business journeys during the working day, then you can claim for them.

[Buenchico]

My post, above, in no way conflicts with those of others. I fully agree that the costs of travelling between home and a regular place of work can never be counted as an allowable business expense.

[chrissa1]

If you charge VAT, you can claim the VAT back on petrol you use.

[FredPuli43]

This rule leads to some artificial accounting. A lawyer may have to go to different courts. He may or not live close to his office. If he goes straight to court without bothering to go into the office first, he nonetheless claims the mileage to court from his office, not from his home. The rule has been correctly stated.

[buildersmate]

To straighten out what others have said:

It matters not whether you are an employee of your ltdco business (as a director) or self-employed, you can't claim home to normal place of work mileage. And, being as you have a retail premises, HMRC are likely to take a dim view of you trying to state that your 'normal place of work' is your home. (People who work from home but go to several other places during a working day during their working day can generally claim mileage from their home, under these circumstances). You will be able to claim mileage/petrol for running the van around during the working day.

Buenchico - businesses CANNOT offset asset depreciation against profits of their enterprise (not any more - they used to be able to many years ago). They may be able to claim 'capital allowances' to offset against profits in the year of the asset purchase - depends on the rules governing the type of business and the nature of the asset.

[Skyline D]

A few more tidy ups. Firstly thanks for the praise factor-fiction but I'm really not a tax expert. I do a bit of it here and there, mainly Corporation Tax not income tax and need to have a decent knowledge of the system in doing my real job which is as an auditor.

buildersmate has, not surprisingly, pretty much covered everything else already. You cannot claim petrol or mileage rates for travel between home and work. Doesn't matter if you are an employee, self employed or indeed in an owner-managed company. You can't do it.

Also Chrissa is wrong, don't follow that advice. Whether you are VAT registered or not (which I guess you are not as you describe it as "small") you cannot reclaim VAT on fuel if the fuel expense itself is not deemed a business expense. Even if you could, you'd have to account for a scale charge for private mileage anyway.

You can only claim motor expenses of any sort if the vehicle is used in the business. If it's used to go and get stock from wholesalers or deliver goods to customers then that's fine. Expenses in relation to that would be allowable. If it really is only used to go to and from work then nothing relating to the vehicle is allowable. You wouldn't be able to claim the road tax, insurance or any repairs either. And you wouldn't be allowed to claim capital allowances on the vehicle if you own it or the lease charges if you don't.

It's not clear what exactly is meant by "the van is purchased through the business" in the OP? If that just means payment comes from the business back account then that's irrelevant. It's presumably charged against Drawings or Directors loans depending on what the structure of the business is. If it is meant to imply the costs of the van itself are allowed as a business expense then that seems odd. If the accountant is allowing the costs of the van then it must have some business use. That being the case then some of the running costs would also be allowed.

It may just be we're all reading too much into this and all itsmefolks is actually saying is "why doesn't my accountant let me claim the petrol costs from home to work?", in which case the answer is because it's not business mileage and isn't for anybody.