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Motoring Expenses

What you need to know

These include road tax, insurance, oil, petrol, servicing, repairs, spares, cleaning materials, tyres, AA/RAC subscription, interest charged on a loan for vehicle purchase, car hire, garage rent (this must actually be paid out, i.e. you cannot claim for the garage on the side of your home).

Motoring expenses will only be allowed on the business part of your mileage. That is why it is suggested that you keep a mileage logbook. For example:

— If total mileage is 10,000, and total motoring expenses = £1,000

— If total business mileage is 5,000, then allowable motoring expenses = £500

It is also possible to claim what are known as capital allowances, which reflect the depreciation of the vehicle:

Mileage Allowance Relief 

As an alternative to recording all motoring expenses, HMRC will accept a far simpler method for claiming motoring expenses. 

Currently, the allowances are:

Cars and Vans  First 10,000 business 45p per mile. Each additional mile 25p per mile

Motorcycles  24p per mile

Bicycles  20p per mile

If you opt for this scheme, you simply have to record all business mileage. No other motoring expenses or capital allowances (for the vehicle) may be claimed. There are two points to bear in mind with the AMRs scheme:

1. Your turnover must not exceed the VAT registration threshold, which is £85,000 until 31 March 2022.

2. You are unable to chop and change from one scheme to the other. On a change of vehicle, you must either switch to the above basis or claim all motoring expenses and apportion motoring costs between business and private trips, to arrive at a figure for business motoring expenses.

In terms of simplicity, the AMRs have much to recommend them but a taxpayer must make a decision as to which method to adopt, with regard to his or her individual circumstances.