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How do I claim for vehicle and travel expenses as a sole trader?

There will likely be times as a sole trader when you need to meet clients, see suppliers, or make site visits. Whilst there’s rarely such a thing as a free ride, if you are a sole trader or in a partnership and use a car for business, you might be able to claim tax relief on the costs of owning and running it.

Commercial vehicles just for business use

If you purchase a commercial vehicle which is solely used for business purposes then you can generally claim the whole purchase price as a capital expense, plus claiming all of the running costs involved.

Non-commercial or mixed usage vehicles

If you have a non-commercial vehicle, and it is not solely used for business purposes, then you can only claim a proportion of the costs. This is based on how much the vehicle is used for business purposes.
For example, if the vehicle costs you £10,000 to buy, and you use it 75% of the time for business, then you can only claim £7,500 as an allowable expense.

Two ways to claim for vehicles as a sole trader

You can either:

  • Claim allowable expenses for a range of costs such as insurance, repairs and servicing, fuel, parking, hire charges, licence fees, and breakdown cover.
  • Use simplified expenses to claim for your travel costs as a flat rate for mileage, instead of the actual costs of running your vehicle.

Watch our video about claiming tax relief for using your vehicle as a sole trader, and learn more about our online accountancy services for sole traders.

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