Tax Rebate On Expenses

Are you entitled to a tax rebate on expenses such as business mileage?

Running a car myself from my base in Horsham I know how expensive it is to travel around. With petrol costs rising it is important that if you are using your vehicle for work, you are getting as much back as possible.

Simply if you have incurred an expense whilst undertaking a business activity there is every possibility that you can claim tax relief on the amount you have paid out.

The most popular expenses that will attract tax relief tend to fall into two categories, vehicle expenses and hotel/meal expenses. However if you incur an expense solely in doing your work then you should include these in detail on your tax return. The HMRC (HM Revenue and Customs) will then decide if tax relief is due.

I have included a summary of the two most common categories below:

Vehicle Expenses

If you use your own car (including those with a car allowance), van, motorcycle or cycle for business mileage you can usually request tax relief on the expense you have incurred.

Current rates (2010/11) are:

Vehicle Rate (2010/11) - Increased for 2011/12
Car or Van 40p per mile first 10,000 business miles, 25p per mile after that.
Motorcycle 24p per mile (all business miles).
Cycle 20p per mile (all business miles).

The key to the success of these claims is to ensure you keep all your records up to date. You need to keep a note of the amount of miles you have travelled and how much your company has reimbursed you.

So what counts as business mileage? Well it is the mileage you do for your work including travelling to a temporary work place. Please be aware though that it does not include normal travel to and from your permanent workplace or any private travel.

Example Calculation:
If you travel 8000 business miles per year and your company pays you 10p per mile, the calculation would be 8000 x 40p = £3200, minus the amount your company has already paid you (8000 x 10p = £800) giving a total of £2400 to work with. If you fall within the normal tax rate bracket £2400 at 20% = £480. If you fall within the higher tax rate bracket £2400 at 40% = £960.

Hotel/Meal Expenses

Most business expenses you incur whilst travelling away from home will attract tax relief such as accommodation, business phone calls and meals. Unfortunately though, you cannot claim for bar bills, personal phone calls, laundry or newspapers.

Again it is important to keep your records up to date with supporting documentation; you will need to know the date of your stay, the amount you spent and how much your employer has reimbursed.

Other Expenses

Many other expenses can attract tax relief; you need to be sure that the expenses incurred were “wholly, exclusively and necessarily” for business purposes. If you are not sure whether the item you want to claim for is valid then you can contact the HMRC.

It is simple to claim, you can locate the relevant documentation on the HMRC website, however it would be even easier if you give us a call at The Sussex Bookkeeper in Horsham. We will complete all the documentation for you – It could not be simpler.