Diesel For Own Use

[alan 1972]

Hello all. I would be gratfeul for some information please.
Suppose I spend £1,000 on diesel for my business van and then say that £200 of that is for personal use. On my self assessment tax return, do I claim the full £1000 as expenses then show £200 later as being Goods/Services for my own use, hence income, or do I claim £800 for diesel as a business expense and then £200 as Goods/Services for my own use.

In my rough calculations I seem to come up with a figure that shows by doing the latter, the £200 becomes 'profit' for which I am charged 20% tax plus 8% NI Class 4 rather than just 20% tax alone on income. In other words I am being hit twice - once by not claiming the full cost of the diesel then being hit with NI Class 4.

Thanks in advance for any assistance offered.
Regards. Alan

[pawncob]

You claim £1000 and write back £200.

[mullet]

Using your figures ...

If you're using the short self employment pages (turnover below £70,000) then you would put £800 in box 11, which is noted "car van and travel expenses after private use proportion". http://www.hmrc.gov.uk/forms/sa103s.pdf

If you're using the full self employment pages then you would put £1,000 in box 19 (car van and travel expenses) and £200 in box 34 (disallowable expenses). http://www.hmrc.gov.uk/forms/sa103f.pdf

[alan 2010]

Hello Mullet and Pawncob

Many thanks for your kind and prompt replies.
I submit my return on-line using the short form and all expenses are grouped together as a 'total allowable expenses' figure - they are not given as individual items like on the forms mentioned.

By following your advice and taking off the £200 first so thus claiming just the £800 this does not incur the extra 8% NI class 4 on the £200 which my earlier calculation had done.

I think my issue has arisen because I had previously been informed that diesel for my own use even though I had deducted it from my expenses claim as a disallowable expense had to be shown as 'goods or services for my own use' which then incurred the NIC4 on the profit element.

Many thanks to both of you for your assistance.

Kind regards.

Alan

[Lambs]

A,

The treatment you had previously been advised to use would be correct, if you bought and sold diesel as your trade. The specific treatment requiring you to recognise a profit - and therefore to pay additional tax and NI - is in respect of your normal stock in trade. So if you're a butcher and you appropriate some of the meat yourself, you're supposed to 'sell' it to yourself, recognising the full market rate. But if you were to appropriate some stationery, then that would just be a disallowable cost, similar to the diesel already discussed above.

See HM Revenue & Customs' Business Income Manual @ http://www.hmrc.gov.uk/manuals/bimmanual/bim33630.htm

There are different rules for services, rather than goods.

And don't forget VAT - if you're VAT-registered, then you need to consider adjusting your VAT account, either by disallowing some of your input VAT, or using the 'fuel scale charge'. See Andrew Needham's article in TaxationWeb - http://www.taxationweb.co.uk/tax-articles/vat-excise-duties/claiming-back-vat-on-motoring-expenses.html

Kind regards,

Lambs