Claiming Vehicle Expenses using HMRC Actual Expenses Method
Self-employed individuals in the UK can claim actual running costs of the vehicle use for performing business-related duties. You can claim both variable costs, such as fuel and maintenance, and fixed costs, such as insurance and depreciation. Only the business-portion of the expenses can be claimed. The business vs. personal portions are determined based on mileage. Certain conditions apply when choosing this program.
About this program
Using the Actual Expenses program, both mileage and the actual expenses of your vehicle are logged. Trips logged by the app must be classified as either #business or #personal in order to determine the business use of the vehicle. In addition, you should log all expenses related to the vehicle: fuel, maintenance, insurance, road tax, MOT & Servicing, depreciation (Capital Allowances), lease costs, parking, tolls, etc.
How to use this program
Select the HMRC Actual Expenses program if you are self-employed, and you use your private vehicle for your business. You cannot use this program if you are employed or use a company car.
Compared to the Mileage Allowance program, this method is more tedious, because you must log all of your vehicle expenses. You should choose this method only of your vehicle expenses are relatively high, and are not covered by the MAP mileage rate.
How this program works
When you select this program within Psngr app:
▪︎ Trips are logged (automatically) and you must classify them as either #business or #personal. The mileage of your trips is used to determine the business use of the vehicle.
▪︎ Expenses of your vehicle, such as fuel and parking, can be logged separately. You should log all fixed and variable expenses. The expenses you can claim or deduct are based on the total expenses amount apportioned based on the percentage of business use of the vehicle.
▪︎ Reports include sections for “Trips”, “Expenses” and “Vehicles” section, each with a list of the items logged in the report period and a summary.
▪︎ Report Rules - by default, reports generated by this program are restricted to a single vehicle. You cannot combine multiple vehicles in a single report when using this program, because your actual expenses are vehicle-specific.
Conditions
- This program is allowed only for self-employed individuals.
- You cannot log expenses you incurred when using the vehicle strictly for personal purposes, e.g. when parking or paying tolls for commuting.
- Fines can not be claimed as business expense.
- If you have claimed deductions using the Actual Expenses method, you cannot switch to a different method for the same vehicle. Once this method is chosen, it must be used consistently for that vehicle.
- If purchasing a vehicle, depreciation is claimed through Capital Allowances, based on CO₂ emissions. Psngr allows you to log depreciation expenses for your vehicle but does not provide automatic calculation of the depreciation amount. You must calculate the appropriate depreciation amount yourself.
You can’t use this program if you:
• Used other deduction method for your vehicle in the past
• You are employed, and/or your employer reimburses the fuel expenses for the vehicle.
Disclaimer
Psngr does not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, nor should be relied on for tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors.