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self employed, home allowance and mileage

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Joined: Tue Nov 04, 2008 8:26 pm

self employed, home allowance and mileage

Postby ddj » Tue Nov 04, 2008 9:02 pm

Hi, am looking for some clarification and will try to be brief!
I am a sole trader, working part-time from home travelling to clients as and when required. Two main questions:

1. Home allowance: i can claim £3 per week - do i need to pro-rate this as i am p/t (approx 3 days a week)?

2. Car mileage: I understand there are two options (which once i adopt one i have to stay with it until i change my car?). Option 1: claim capital allowances (pro-rated for business use) and business use element of all related expenses. OR option 2: use IR mileage rates (i am below VAT threshold) for business mileage.
My query is that i currently own a car (9 years old) but husband is starting a new job (PAYE) with a company car that i will be able to use, so i am looking into which car option would be most tax efficient for me.
Firstly - could i claim the IR approved mileage rates on my husbands company car or can i only claim my business use petrol expenses?
secondly - if i continued to use my own car and decided to adopt the claim CA's, all business expenses route etc - what value do i use for the intial CA claim (likely to be low given vehicle age)? Havn't looked at any numbers for the two options yet, just wanted to clarify what options could be available to me.
many thanks

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Re: self employed, home allowance and mileage

Postby pawncob » Tue Nov 04, 2008 10:20 pm

There is no fixed allowance for use of home. Use a fair ppn of the actual costs. If it costs you £1500pa to run the house (3 bed + 2 reception) and you use one room then 1/5 can be claimed if used full time. (5/7ths) Restrict this if less.

Your husband will pay benefit for the car. If you use it you can claim mileage allowance. Don't forget you actually have to pay him this.
Value for CA claim is market value at inception. (not much!)
With a pinch of salt take what I say, but don't exceed your RDA

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Re: self employed, home allowance and mileage

Postby RAL » Tue Nov 04, 2008 11:23 pm

£3.00 fixed home allowance is for employees when it may be difficult for employees to calculate the exact amount of the allowable additional costs that they have incurred as a result of working at home. This is just for ease of administration.

What you have to remember is that if you use a room partial for business and partial for private there are some CGT consequences.

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Re: self employed, home allowance and mileage

Postby robbob » Wed Nov 05, 2008 10:06 am

If you are using a room for your business it is sensible not to let your business have "exclusive" use of any room if capital gains may be an issue.


BIM47820 has some guidance on what expenses can be claimed


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Joined: Tue Nov 04, 2008 8:26 pm

Re: self employed, home allowance and mileage

Postby ddj » Wed Nov 05, 2008 1:21 pm

many thanks for the helpful replies. Can i clarify a couple more things?

1. The room i use to work in is our study - but is used by all members of the family (it is 'my office' when the kids are at school) - does this help avoid any capital Gains issue? i assume this must be a common situation for most sole traders?
2. car mileage - i note the comment about paying my husband the mileage allowance if i use his company car - will HMRC allow me to just charge petrol costs (based on proportion of business to private miles) or do you have to adopt either the wholly inclusive costs or the approved mileage rate? - all i want to achieve is a deduction for the costs i am physically incurring in my business ie my petrol.

thank you to all your comments so far

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