A Nugget of Advice About Mileage Claims
I visited a prospect (now a client) a few weeks back and saved them lots of money with one simple nugget of advice.
I asked about mileage claims that the director is making. He hadn’t claimed any as he believed that the claim would not be for much and therefore recording the mileage was “too much effort”. I suggested a small experiment…
On my second visit three weeks later, he reported to me with a very big smile that after following my suggestion he claimed £180 in mileage from the company with very little effort on his part. This would add up to £3,120 per annum, which he can take tax-free from the company. And the company can claim corporation tax relief on that as well.
We all know that as a director of a limited company (and as employees, subject to company’s policy) you can claim mileage if you are doing business journeys in your personal car. HMRC currently state that you can claim 45 pence per mile for the first 10,000 miles in the tax year; any mileage above that you can claim 25 pence per mile. This covers wear and tear on the car, car insurance and fuel costs. There is also a VAT element that the company can reclaim if the company is VAT-registered.
From my experience, it’s keeping the records that proves to be the biggest hurdle and therefore the claims do not get made. Directors can find it difficult to get a minute even for lunch so keeping mileage records is well down the list. Well, a wonderful app called MileIQ (www.mileiq.com) makes it possible with little effort.
The app tracks your mileage wherever you go, as long as the device it is installed on is with you and is switched on. You don’t have to have satellite navigation on to track your mileage. The cost is under £50 per annum and as an added bonus this can be classed as a trivial benefit by HMRC, hence the company can pay for it and there are no tax and National insurance implications.
Of course MileIQ can’t distinguish between your personal and business journeys, but it is very simple to classify each journey as either business or personal.Don’t miss out on tax-free cash – use the technology in your pocket to keep your pounds in your pocket!