Whether you travel between different clients throughout the day or you drive out to win new work in person, your car will be of vital importance to your business.

If that’s you, what you spend on travel will accumulate over the year into a large amount and it’s important that you claim as much of the back as you can. Although claiming motoring expenses can be slightly more difficult than with other types of business expenses, Burton Beavan can help.

Please note that this article refers to sole traders and the self-employed.

Motoring expenses – what expenses can I claim?

The reason many do not claim back all they can on their motor expenses is that it’s complicated. That is because you will probably use your cars for a mixture of both business and personal use.

Dual use makes accounting a bit more complicated. Unlike other business expenses, it is not just a case of keeping receipts and offsetting them against your profits.

To work out exactly what it is you can claim, you’ll first need to ascertain the real reason for making a journey. In other words, you’ll need to establish just how much of the usage of your car is for business purposes.

Motoring expenses – what counts as business travel?

The journey between your home and regular place of work is classed as your commute so it cannot be claimed back. However, aside from your commute, any mileage that is solely related to business can be classified as a legitimate expense.

This doesn’t necessarily mean just driving to your customers’ premises. You could include supply runs to purchase materials and even trips to visit your accountant.

Motoring expenses – how should I record business mileage?

If you plan on claiming on business mileage, then it is always good practice to keep an up-to-date log of the business journeys you make.

This is evidence which will support your claim and, should HMRC look into it, you’ll have written records of the reasons behind each journey.

You could keep a note for the reason you’re making a trip and record the postcodes you’re travelling to and from as well as the mileage between them. You can even use a mobile phone app to track the journey for you and that app can note the reason for the trip.

Once you have your log, you can work out the amount that you can claim. For the first 10,000 miles, simply add up the number of miles you have travelled and multiply it by 45p. You can then pay yourself this amount in regular instalments that suit you (be it weekly, monthly or yearly) which you can then offset against your actual motoring costs.

Motoring expenses – how can I claim business usage of my car?

If you prefer, you can also claim on the business part of your actual motoring expenses.

Now you know what constitutes as business use, you can compare this with the miles you drive for non-work-related purposes so that, once you’ve made a final calculation using both systems, you can choose the one that is most advantageous to you.

Add up all of your motoring-related expenses, including petrol, insurance, tax and repairs, parking, breakdown cover, fuel, and more. Look at the total mileage you do over the year and work out the percentage of travel for business purposes. You can then essentially use the same percentage, apply it to your total annual bill for the car, and then claim that back.

You can only claim back using one system on one car per year.

Motoring expenses – get help

Once you see which method of claiming back your expenses saves you the most money, choose that one. If you’d like help with this, please speak to your Burton Beavan accountant today on 01606 333 900 or email us at hello@burtonbeavan.co.uk.