Are you a sole trader using a car, van, or bike for work? Good news—you can claim tax relief on your vehicle expenses! Let’s break down how you can save money and keep things simple. 💼🏎️
What Are Vehicle Tax Allowances?
Vehicle tax allowances let sole traders claim back some of the costs of running their vehicles for business purposes. This includes:
- Fuel
- Maintenance & repairs
- Insurance
- Parking
Important: You can only claim for business use, not personal trips!
How Can Sole Traders Claim?
Mileage Allowance
This method is easy! You claim a set amount for every mile you drive for work:
- Cars & vans: 45p per mile for the first 10,000 miles, 25p after that.
- Motorbikes: 24p per mile.
- Bicycles: 20p per mile.
Actual Expenses Method
Want to claim the exact running costs of your vehicle? You can include things like:
- Fuel
- Insurance
- Repairs & servicing
- Road tax
Tip: If your vehicle is used for both business and personal trips, you’ll need to split the costs based on mileage.
Capital Allowances for Sole Traders
If you’ve bought a new vehicle, you may be able to claim part of the cost as a capital allowance.
- Electric vehicles qualify for a 100% first-year allowance.
- For petrol and diesel vehicles, the allowance depends on their CO2 emissions. Check your vehicle’s CO2 rating with this handy government tool.
Leased vs. Owned Vehicles
- Leased vehicles: You can claim the lease payments (with some restrictions).
- Owned vehicles: You can claim capital allowances instead.
Top Tips for Sole Traders
- Keep records! Log your mileage and keep receipts for expenses.
- Separate personal and business use. Only business miles count!
- Go green: Electric vehicles come with extra tax perks.
