Less than half of self-employed workers use simplified mileage rates

Less than half of self-employed workers who use their vehicle for work purposes are aware of HMRC’s simplified mileage rates, according to its own research. The flat rate deduction is 45p per mile for the first 10,000 miles and 25p for every mile after this, and these can be used to claim for car usage that is solely related to work. HMRC undertook the research to get a better understanding of travel expenses associated with the self-employed, and to find out why some people don’t use the simplified mileage rates, and whether they might use them in future. The survey of 1,000 people covered the self-employed or those who are partners in a business partnership. It found that just 43% of self-employed people were aware of the simplified mileage rates, with car users (49%) more likely to know about them than van users (27%). Even sole traders (44%) were more aware than those in partnerships (31%). Where they had heard of them, most had been advised about them by their accountant or tax agent, with less than one in 10 hearing about them from another source.

Who is using the simplified mileage rates?

The widest adoption of these rates among those who had heard about them came from smaller organisations with a turnover of less than £20,000 (74%) or those with revenue of between £20,000 and £49,999 (64%). Larger businesses with higher revenues were less likely to use them, according to the research. For those people who knew about them but were not using these rates, the most likely explanation was because they preferred to keep exact records (23%). Around 20% calculated they would be worse off if they used them, while 14% felt the rates were too low compared to the real cost of using their vehicle for work. That said, vehicle users were more than twice as likely to agree (45%) than disagree (20%) that these rates would be sufficient to cover their vehicle expenses associated with their business. Yet more than a fifth said these rates didn’t cover their vehicle expenses. Most people still rely on manual record keeping for their travel expenses, but those who use simplified mileage rates were considerably more likely to use a digital recording method, HMRC found. Whichever way you deal with your travel expenses, you should speak to your accountant to ensure you are claiming everything you should for travel expenses, and other work expenses you may not realise you can claim for.

Let us help you

If you want help to make sure you are claiming your full allowance for any work-related travel, or any other business expenses, please get in touch with us and we will do what we can to maximise your tax relief.

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