Beware when claiming business mileage
Claiming motoring expenses is not as simple as independent practitioners often think. Vanessa Sanders outlines the rules for those new to private practice.
What is a business mile causes such consternation on its unfairness, particularly where doctors are taking up work many miles away from where they live.
But the law, as clarified by what is known as the Samadian case, does not allow tax relief claims for consultants’ travel between home office base and other business bases where attendance is regular and predictable.
This includes the following:
Travel from home office to private hospital
Travel from NHS employment to private hospital
Travel from private hospital to home office
HMRC and the courts believe that while your home office does count as a workspace, and hence attracts a deduction for apportioned home costs, there can be no deduction for the travel to and from this business base if it is habitual.
You can, however, claim for the following:
- Travel between private hospitals;
- Emergencies – as not habitual;
- Visits to patient at home;
- Courses and conferences.
When keeping records – which you are required to do – be mindful of the case of Dr Jolaoso v HMRC, where the motoring expenses were restricted on the grounds that he had not provided any evidence to support his claim.
I therefore urge you to keep a mileage log in your car demonstrating the following:
Date of journey;
Start and destination points;
Mileage log – and if having to take an unusual route, a note why (e.g. M25 shut), as HMRC use Google to substantiate mileage claims;
Brief reason for journey;
Odometer reading at the start and end of each financial year.
To calculate the costs, if you are self-employed, you can then deduct the business proportion of the total costs of the car including:
Fuel;
Insurance;
Repairs and servicing;
Cleaning;
Road fund licence;
Breakdown cover;
Capital allowances on the capital cost.
Or like employees, just apply 45p per mile to the business journeys and deduct this instead.
Beware if your spouse is working for you. Do not claim a proportion of their motor vehicle. Pay them 45p per mile for its use, otherwise you could find they are charged for a benefit in kind on the provision of a car for an employee.
If your business does want to provide a company car which is allowed for personal use, you could consider an electric vehicle (EV).
Vanessa Sanders (right) is a partner with Stanbridge Associates, accountancy, finance and tax advisory specialists