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Q: Can I use mileage allowance if I am self-employed?

Oct 10 2005

Answered by: Clive Lewis     Ask a question

Yes – for tax purposes you can claim against the profits of the business at the rate of 40p per mile on the first 10,000 business miles and all subsequent miles at 25p per mile.

Alternatively you can claim a percentage of the cost of running a vehicle used for business purposes. Allowable costs include petrol, repairs, Road Fund Licence, MOT and insurance. In addition you can claim the percentage of the capital cost of the vehicle (subject to a maximum original cost). The relevant proportion is the business mileage expressed as a percentage of the total mileage of the vehicle.

It is therefore essential that you keep a record of business mileage including the date, details of the journey and purpose.

The VAT rules about business expenses are sometimes different from the Inland Revenue rules. You should not assume that because something is a deductible expense under Inland Revenue rules you can deduct any VAT charged on it. For VAT issues regarding cars see Public Notice 700/64 (Motoring expenses).

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