When I was self-employed I used to charge my business 40p a mile for the first 10,000 business miles in a tax year and 25p a mile for any business miles exceeding that. At the time this was accepted as fair by the Inland Revenue. I calculated my business mileage by keeping a log of business journeys in a book in the car. So I'd take an odometer reading first thing in a morning and on completion of my day's work another reading and record the business miles run with a summary of locations visited written alongside. By this method I could accurately calculate the total number of business miles run in any tax period and if required justify them.
I used to do quite a high mileage so the tax savings were significant. I could also claim part of the maintenance costs back against tax by calculating what proportion of the car's total mileage was for business as a percentage of its total miles in a given tax year and proportionately allocating that percentage of the maintenance costs ( servicing, tyres etc ) to business costs.
In addition, being VAT registered I could also over and above that claim back the proportionate VAT element of the maintenance costs and the VAT element of the actual business fuel costs ( as opposed to that of the mileage rate applied )
More or less, I could just about offset the real costs of the car, provided I didn't buy an expensive vehicle.
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