A HMRC (HM Revenue and Customs) warning has been issued to motorists as they could be unknowingly handing over additional tax, following news that households might be due substantial payments. For those not familiar with the key motoring financial tips, it appears there are several crucial points regarding money you need to know about.
Kim Sones, who provides various business-related guidance on social media, recently highlighted what motorists need to understand about driving expenses, as you might be due extra cash. Regarding HMRC matters, there's something extremely vital you must understand about your driving costs.
It's crucial to understand your tax obligations and entitlements properly. Recently, it was also revealed that HMRC can pursue individuals using something termed "Direct Recovery of Debts."
In an online video, Kim explained: "If you're using your own car for anything business-related like meeting clients, quoting for jobs or picking up materials, and you're not claiming mileage, you're overpaying tax, and here's why. HMRC lets you claim 45p a mile for the first 10,000 business miles each tax year, and 25p a mile after that.
"So, if you drive 10,000 miles, that's £4,500 you can claim as an expense in your accounts, reducing your taxable profit by the same amount. The best bit [is] you can pay yourself that money tax free."
She added: "Just remember, trips from home to your usual place of work don't count, as HMRC sees this as commuting, but any business journeys outside of that do. Keep a simple mileage log, or use an app like Trip Catcher, and pass it to your accountant at year end.
"So, don't give HMRC more than you need to. Track your mileage. Claim what's yours, because you've earned it."
Numerous individuals were swift to express gratitude to Kim for the guidance, as it represents incredibly valuable information to possess. Should you remain somewhat perplexed, there's a straightforward explanation outlined on the Government website to assist people.
It declares you might be eligible to claim tax relief if you utilise cars, vans, motorcycles or bicycles for business purposes. Nevertheless, this excludes journeys to and from the workplace, unless it constitutes a temporary work location.
The sum you can claim varies depending on whether you're operating a vehicle that you've purchased or leased using your own funds, or a vehicle owned or leased by your employer (a company vehicle). Should you qualify, you will be entitled to claim for the present tax year and the four preceding tax years.
If youre using your own car for business and not claiming mileage youre basically tipping HMRC every time you drive. Claim up to 45p per mile and pay yourself tax-free instead. Keep a quick mileage log and thank yourself later! #KnowYourNumbers #TaxTipsUK #SmallBusinessUK #SonesAccountancy #LandscapersKnowYourNumbers
The website declares: "If you use your own vehicle or vehicles for work, you may be able to claim tax relief on the approved mileage rate. This covers the cost of owning and running your vehicle. You cannot claim separately for things like fuel, electricity, vehicle tax, MOTs [and] repairs.
"To work out how much you can claim for each tax year you'll need to keep records of the dates and mileage of your work journeys, add up the mileage for each vehicle type you've used for work [and] take away any amount your employer pays you towards your costs, (sometimes called a 'mileage allowance').
"You can claim tax relief on the money you've spent on fuel and electricity, for business trips in your company car. Keep records to show the actual cost of the fuel. If your employer reimburses some of the money, you can claim relief on the difference."
The tax rates vary depending on the type of vehicle you drive and the distance you travel. Claims can be submitted online, with further details available on the Government website about how to proceed.
