Can I claim for all of my motor expenses?

Can I claim for all of my motor expenses?

We should look at motor expenses first in terms of income tax relief and second whether or not you can reclaim the VAT.

Income tax relief

Motor expenses will include petrol, oil, maintenance costs, road fund licence, insurance, car cleaning and any other costs associated with the upkeep of the motor car. This is provided that you can demonstrate that the need for a car and therefore the costs are wholly and exclusively for the purpose of your profession.

You will be able to claim for income tax purposes a proportion of your motor expenses that relate to your practice. You will need to work out the overall business and private proportion of your mileage and you should do this by keeping a mileage log. Click here to download a mileage log form.

Be aware that your main place of business for this purpose will most likely be chambers, even if you do much of your work from home. Your mileage from home to chambers is in most cases not eligible business mileage.

There are special rules governing tax relief for car leasing. Generally speaking you can claim the leasing costs subject to deducting the private proportion. Ask for our advice if you are intending to lease a car with a carbon emissions rating (CO2) of over 130g/km as the full leasing cost will not be tax deductible – there is a permanent disallowance of a proportion of the cost.

You can claim tax relief on the cost of car parking for the purpose of your business, but car parking at chambers itself is treated as part of the cost of travelling from home to your main place of business, and is not tax deductible.

Reclaiming the VAT

You are able to reclaim just 50% of the input tax for the cost of car leasing regardless of the price of the car.

With the exception of car fuel, you can claim back the VAT on all your motor expenses in full.

For car fuel, there are special rules. You claim back the VAT in full but work out the private proportion by reference to a scale charge. The scale relates to the CO2 rating of the vehicle. The scale charge is added to the output tax declared on your VAT Return and paid over as normal.

If your business mileage is very low, you may find that you are better off choosing not to reclaim any VAT on fuel and therefore avoid the scale charge entirely. We can work out which is the best option for you, based on your personal circumstances.

You are able to reclaim the VAT on business car parking. In contrast to the treatment of car parking at chambers for income tax purposes, you are able to reclaim the VAT input tax.

Be aware that there is no VAT on on-street parking meter charges.

This answer was last checked May 2017. This answer is for general guidance only. It provides an outline, and may not include points which are important in your case. You should not rely on this answer without taking individual advice based on the full facts of your case. The information given was correct at the time of release.