Claim expenses for using your own car in your property business
Landlords running a property business through a limited company are likely to need to use their own car for business purposes. Where this is the case, what can you claim by way of expenses?
Two options
Tax rules state costs can be deducted from income where they are incurred wholly and exclusively for business purposes. When it comes to cars, a deduction can be claimed for the cost of fuel and associated running costs.
There are two options for working out the total expense to be deducted:
- Using the simplified expenses system; or
- By reference to actual costs
Depending on the method used to work out the deductible amount, it may also be possible to claim capital allowances in respect of the cost of the car.
Simplified expenses system
The simplified expenses system is an easy way to calculate the allowable deduction. The landlord only needs to keep a record of business mileage for the year and calculate the deduction by reference to the permitted mileage rates (see table below).
It is important to note that if capital allowances have been claimed on a vehicle (obtaining immediate tax relief) this method is not an option.
The mileage rates used to calculate the deduction are as follows:
| Vehicles | Rate per mile | |
| Cars and vans | First 10,000 business miles | 45p |
| Subsequent business miles | 25p | |
| Motorcycles | 24p |
Actual costs
An alternative is to claim for actual costs incurred. This will require more work but may give a higher deduction.
Where the car is used for both business purposes and privately costs must be apportioned – a deduction is only given to the extent these costs relate to the business.
When working out a deduction based on running costs consider the following items:
- Fuel
- Insurance
- Repairs
- Servicing
- MOT
- Tyres
- Breakdown cover; and
- Road tax
If you are using the cash basis to prepare your accounts, the deduction is given in the period when the expenditure is incurred; if you are using the accruals basis, the expenditure must be matched to the period to which it relates.
Capital allowances
Capital allowances can only be claimed if simplified expenses have not been used to work out the deductible amount. Where the deduction is based on actual costs, writing down allowances can be claimed for the cost of the car.
As with expenses, if the car is used both for business and private purposes an apportionment is necessary.
It must be noted that cars do not qualify for annual investment allowance or a deduction under the cash basis capital expenditure rules.