When you are self employed you can deduct expenses which are incurred wholly and exclusively for the business. It is possible to have some private use from an item, but you have to be able to differentiate between business use and private use to make a claim. If you use your car for business purposes, it is possible to claim for the cost of using your car.
There are two ways to calculate the amount you can deduct from your business profits. You can use the fixed mileage rates provided by HMRC to calculate the mileage, or you can keep detailed records which show all private and business mileage to calculate the exact amount of mileage.
You may also claim capital allowances for your car if it used for the business. If you bought a car after 6th April 2009, the allowances are calculated based on the CO2 emissions, while a car purchased prior to 6th April 2009 will calculate allowances based on the cost of the car. The CO2emissions are shown on the car’s V5 certificate. You will claim a ‘writing down’ allowance, which is an allowance which will be used to reduce the remaining balance on any capital expenditure that you haven’t already claimed an allowance for. Capital allowances are not allowable for certain vehicles, like a driving instructor’s car which has dual controls.
The method you use to calculate car allowances will depend on varying circumstances, which is why professional advice should be sought to maximise benefits.
If you are still unsure how to go about claiming car expenses, we have a video guide on this subject which can be found here.
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