Sole Trader Vehicle Mileage Rates

paulbreen911

Hi all, I think I may have seen a thread similar to what I'm about to post but cannot find it.

I have recently quit my job to become a sole trader. I use my commercial vehicle some times to drive long distances to different jobs around the country, but I do not charge within Dublin county, where I live. I have agreed rates to charge clients per km depending on the distance. My question DOES NOT relate to revenue, tax or writing anything off btw.

What I want to know is: My agreed rate is €0.59 per kilometer, but does that mean I charge my clients that 59 cent per km there and same back again or just one way?

Example: Dublin to Cork is 253 km (AA Ireland), so is that €149.27 or €298.54

My gut instinct is that the 59 cent is to cover getting back again, because if your motor costs 59 cent per km you seriously need to change vehicle! Also, that's more than I'm charging for the work carried out too!

Many thanks in advance

Kinetic^

You don't have mileage as a sole trader iirc. You calculate your total motor expenses - services, insurance, diesel, tax etc and then a % is taken as part of the business expense. You can certainly charge your clients travel expenses but it will be deemed as profit if your total travel income exceeds your travel expenses.

If you were a limited company, it's different. If the vehicle is in your personal name and not the company's, you can charge the company a mileage rate for every job that you do - less the distance that it would take you to get from your home to the office (if you have one).

If the vehicle is in the company's name then you would be liable for a benefit in kind due to you having the use of the vehicle.

Open to correction on the above but that's my interpretation of it.

EamonOSullivan

Kinetic I think you are getting all technical on what is essentially a commercial issue.

OP you are right that it does not cost 59c/km to run a normal car or van, but reading your post you have agreed that rate with your customers. Can I ask you is it normal to charge mileage in your line of business?

Apart from that you are right to charge for each way from the sound of things.

nompere

It might be a commercial issue, but technical is how Revenue treat these things.

If the OP is registered for VAT, he must not forget to charge VAT on the expenses he is invoicing to his customers.

http://www.revenue.ie/en/tax/vat/rates/decision-detail-02493.jsp

dbran

Hi

Your 59c needs to also include other costs aside from the petrol such as wear and tear on the vehicle, your time spent driving from A to B, motor tax, vehicle repair etc. So 59c per kilometer may be correct rate to charge, it is not too disimar to the civil service rate.

I note that OP said that he is not asking about the tax issues involved although the other posters have given good information on that.

Kind Regards

dbran

paulbreen911

Hi all, thanks for the detailed replies.
My question does NOT refer to expenses. All I want to know is do I charge 59 cent per km to get to the job and then 59 cent to get back from the job as well, or just the 59 cent to get to the job and that'll cover the return journey too.

As for revenue, well they can go and take a running jump in my opinion. But No Im not registered for vat yet as I have yet to make much money, Im only at it for a week! I do realise that by me charging my clients transport for me to get there that ill be taxed on the whole lot, and that's something that I will deal will correctly and legitimately in due course. My question has nothing to do with that aspect. Purely the charge to the client. 59 cent one way or return?

Oh sorry eamonn, forgot to respond to your question. Yes it is normal to charge for this yes. In my industry everything is paid by the client, food, accomodation, transport, everything. Much of my work is last minute so I may have to travel to dingle "now" and have to work 20 hours straight under severe stress, so damn straight they pay for everything! haha

EamonOSullivan

All other posters have given solid advice as far as I can see - but it looks like the answer is 'Yes' to the question orginally posed by the OP. Good luck in the new business.

gbee

I'm on 77C a mile. Out and back.

paulbreen911

Cool, so it's decided. Thanks for all the help.

Wow gbee 77c a mile! I just don't know if I can get away with that much, it's just so expensive. Not sure if I'd get much work with that rate! What are the best ways to justify it do you think?

deandean

Hi OP, what you charge your customer for mileage is a business matter between you and your customer. If you can get away with charging more: great! There are obviously, norms, generally as stated above.

In answer to your query: absolutely positively yes, charge for return mileage. Note the mileometer (kilometerer?) reading @ start and @end of the entire journey and thats what you charge.

Best of luck!

P.S. Do a full spreadsheet of the total cost of ownership of your vehicle, including depreciation, etc and you'll see that 59c per Km is very modest.

Dilbert75

deandean wrote: »

In answer to your query: absolutely positively yes, charge for return mileage.

+1

Starting off in business its only natural that you're trying to make sure you don't price yourself out of jobs. But unless your return journey is free, you need to cover your costs. In general where you make it obvious that you're only trying to cover your costs, customers will be decent enough. Especially if you're providing a specialist service that they can't easily get elsewhere.

If you think it'd be more palatable, you could maybe come up with a sliding scale so the first 100km is X c/km, 100-200km is Y c/km and 200km+ is Z c/km. That way they feel like they're getting a discount. Hopefully the long trips will be few and far between and, where necessary, you'll get to use motorways and proportionally lower fuel consumption, less wear, etc. will accrue.

As for VAT, etc. I'll leave those questions to those who know what they're on about.

barneystinson

paulbreen911 wrote: »

Cool, so it's decided. Thanks for all the help.

Wow gbee 77c a mile! I just don't know if I can get away with that much, it's just so expensive. Not sure if I'd get much work with that rate! What are the best ways to justify it do you think?

Ummm... 59c per km is 95c per mile!?;)