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Tax Return for Self-employed

We've got plenty of hills in Scotland, laddie. But what goes up must come down. And yes, it's averaged. Whenever I refuel I never just buy a round sum's worth, but always fill up, and reset the trip counter. Occasionally I divide the price paid by the number of miles and I tend to get about 8p. Actually it's probably nearer 7p. It usually involves some cross country runs and works out a bit more on the few occasions I've been driving exclusively in town since the last fill-up.

Must say I was surprised when the fuel cost per mile went down when I changed from 1.2l petrol to 2l diesel.

I go to a local non-affiliated garage.

Peugeot 206, basically a hatchback, not that heavy, but it's nice to have a 2l engine in it, so I can feel I could have some boy racer moments if the mood should take me.

From the cheerful chap at the corner shop in Lauriston Place.

It had 44k miles when I got it and 89k now 3.5 years later. I replaced 2 tyres 2 years ago (presumably 26k miles ago and they still have a fair bit of tread left -- the next MOT will tell) and the other 2 just last month, so *those* must have lasted at least

45k but they may well have been "better" ones, so it's difficult to say. But at £38 for a 185 65 R14, who cares if you have to replace them as frequently as every 24k?

No, I'm alleging that your example is too extreme to be compatible with a car worth only £6k.

Yes, except that SDP-only cover is incompatible with *any* business use. :-) Luckily, many policies throw in use in connection with the policyholder's business.

This is probably quibbling beyond what is reasonable, but if the insurance is significantly more expensive to allow other drivers, then the excess cost can't really be a bona fide business expense, can it? Not even 70% of it. I mean, if owner-only is £200 and plus spouse is £50 more (if spouse helps out with the business and does some of the business miles, there can be no question of disallowing any of the £50), but if adding teenage son (who doesn't do any business miles) as named driver for the first time adds £1000 to the premium, you can't really justify £700 as an extra business expense, can you? On the other hand, I suppose an "any driver" extension might be OK on the grounds that you might want to let an employee drive it.

Reply to
Ronald Raygun
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I used to, too, but they're not best equipped to do less popular cars, which all seem reliant on regularly updated s/ware,

And does £38 include balancing, new valve, disposal of old, vat etc?

Ah - you need to look at what happens to omv of "expensive, thirsty" cars after the first 3 or 4 years...!

Re. insurance - yes, I'm aware of all that but the figures I gave is not untypical. Probably more if no NCD.

Anyway, that's all missing the point which was that 40p option may not be the best in every situation, and making careless assumptions is not in the client's interest, nor what she's paying for.

Reply to
Martin

Yep. And all his overheads, like giving the traffic wardens cups of tea so they don't ticket you when you're waiting outside.

Agreed, well, sort of. If/when at the end of the day, having weighed up all the options after having done a great deal of research at the client's expense, it ends up too close to call, not forgetting that the closer it is to call, the more detailed research is required, one needs to question the value for money the client is getting out of your answer, and whether she might not have been better off with the sweeping generalisation.

Don't forget that it's also administratively simpler to count business miles and just pay for them than it is to count business miles to arrive at a percentage use figure and then to tot up all expenses and split them up using said figure, and what if she pays for the maintenance services with a business cheque and for fuel with her personal credit card? She'll be needing your services to sort it all out, which may cost her more than the tax she might save.

Reply to
Ronald Raygun

Understandable assumption, but not true IME. When it's close, you know therre's little to be gained by spending excessive time to refine things.

Also, over the years, you (well, I) end up with all manner of little calc tools which make the checking very quick an simple.

Indeed. And that's what good accountants do constantly. After all, repeat business is rather important.

How do you arrive at "drawings" for the BS unless you tot up all this stuff?

I refer the hon gent to the answer I gave a short paragraph ago...

Your argument about balancing time &/or money spent on precision in accounts applies to everything - not just motoring (ignoring compliance issues for the moment). The trap, therefore, is taking the laissez-faire thing so far that client loses out big-time.

Reply to
Martin

Ah, but you won't know it's close enough not to bother with the detailed research, until you've already done most of it. :-)

If you work out mileage money instead of keeping all the car-related invoices and receipts, then there is no need to tot up and apportion all the car-related expenses. You can just throw away all the receipts and treat any payments that might have come out of the business account as drawings.

If you do go for the actual costs basis, you could still treat all bill payments from the business account as drawings, until you make the final annual reckoning, tot them all up as if you'd paid everything personally (which in effect you would have done) and charge 70% of it to the business (which could simply become just one double entry to DR motor expenses and CR capital introduced (to negate prior drawings)).

The "what if" was rhetorical. There is no conceptual difficulty in any of this, it's just a question of minimising the amount of tedium involved.

Indeed. It's just that with motoring it's relatively easy to see what the administrative implications are going to be.

Of course.

Reply to
Ronald Raygun

Not true, IME. It's a peculiar combination of experience, instinct and (dare I say) serendipity. I guess it's the reward for those early days when I did do detailed stuff without a benefit emerging. By way of example, you saw some figures and said "XJ12". I see "XJ12" and the "probable" figures leap out...

I realise that, but you'd be surprised (or not ATCMB) how often such a payment turns out to be business, but client had forgotten. Even a petrol receipt from 400 miles up north (or down south, in your case) which throws up a forgotten legit business trip, accom, subsist, etc...

It's all down to approach, attitude, conscience, care, instinct, experience, balance ... in fact, loads of things - except, maybe, the text-book!

Works for me, works for my clients... :-)

Reply to
Martin

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