Needless to say, one of the most common concerns for clients at present is the rising cost of motoring, and ways in which they might be able to minimise the burden. So, here are a few ideas about areas you could look at.
Claim back VAT on mileage
VAT-registered businesses can reclaim VAT on the mileage allowances
paid to employees - I've written about this before. Make sure that
you're doing it! Many, many businesses are not reclaiming VAT that
they are entitled to.
Are you recording all your business miles?
If you're running a company, you will be (or should be) claiming mileage from your company at the maximum tax-free rates of 40p a mile for the first 10,000 miles and 25p a mile thereafter. Make sure you record all your journeys! This might seem obvious, but sometimes it doesn't get picked up.
If you're self-employed, you may be using the alternative system of totalling all of your motoring costs and claiming tax relief for the part that relates to business miles. So ensure that the estimate of business miles is right - you may not have checked this for some years, and if the proportion of your mileage that's business-relates has increased over that time, you can increase your claim.
Take your car out of your company
When you purchased your car, it may have been optimal to have it owned by your company and pay personal tax on the benefit each year. But is that still the best way forward? If it's no longer the best system, you may be able to take the car out of the company and be financially better off as a result.
Are you paid mileage allowance of less than 40p a mile?
If so, you can get tax relief on the shortfall, via your tax return if you submit one, or via a letter to the taxman if you do not.
Swap your company car for a classic car!
Taxable benefits are based upon the original list price of the vehicle, so a classic car with a low (in today's terms) list price leads to a relatively small tax bill. Of course, the maintenance costs are likely to absorb the saving, but if you were thinking of buying a classic car anyway, it's one of the few occasions when a company car is generally the way to go!
If you want to discuss any of these ideas, give us a call!
www.fizzhq.com