From 2013/14, HMRC have introduced some flat rate expenses that can be taken advantage of by sole traders and business partnerships. These are for:-
- Business use of vehicles;
- Business use of home (covered in our article last month); and
- Private use of business premises.
The flat rate deduction can be used as an alternative to recording actual expenditure and apportioning the business element.
Business use of vehicles
The flat rate deduction is calculated using a flat rate per mile according to the following table:
| Vehicle type | 2013/2014 flat rate per mile |
| Cars and goods vehicles first 10,000 miles | 45p |
| Cars and goods vehicles after 10,000 miles | 25p |
| Motorcycles | 24p |
The above rates were previously available to small businesses below the VAT threshold but this has been extended to all sole trader and partnerships from 6th April 2013. If you use the flat rates you cannot claim capital allowances or running costs of the vehicle.
You will need to keep a record of your business mileage but will not be required to keep details of your actual running expenditure. You do not need to use the flat rate for all your vehicles but if you start to use it for a vehicle you must continue with the flat rate for that vehicle until it is no longer used in the business.
It would be advisable to review your estimate of the actual business allowances and costs of the vehicle and compare this with the allowance that would be given on the flat rate scheme to see which would give you the most allowance against your income.
Private use of business premises
Some businesses may use their business premises as their home, for example if they are running a guest house, B&B, or small care home. Instead of working out the split of the business and private use of the premises, for costs such as utilities, food, non-alcoholic drinks, household goods etc., you can use a flat rate deduction per month from the total costs for private use depending on the number of people using the business premises as a private home.
The monthly deductions from the total costs are as shown below:
| Number of people | 2013/14 flat rate per month |
| 1 | £350 |
| 2 | £500 |
| 3+ | £650 |
The flat rate does not cover mortgage interest, rent, council tax or rates so the business proportion of these expenses will still need to be calculated.
Please contact us if you have any queries or require any further advice.
