Expenses and overheads

Vamp369

Hi,

I'm a self employed. When I get some work, I charge a flat rate for mileage plue a third for using my own vehicle.

Heres the question, how do I calculate my overheads? I can I still include fuel used even if I've charge for it?

Thanks.

Gloomtastic!

Vamp369 wrote: »

Hi,

I'm a self employed. When I get some work, I charge a flat rate for mileage plue a third for using my own vehicle.

Heres the question, how do I calculate my overheads? I can I still include fuel used even if I've charge for it?

Thanks.

Keep it simple. You can claim up to 85% of all motoring expenses against your business. At the end of the year, total up your car tax, insurance, fuel and car repairs and multiply by .85 (or whatever percentage you feel you can justify).

The Dagda

Gloomtastic! wrote: »

Keep it simple. You can claim up to 85% of all motoring expenses against your business. At the end of the year, total up your car tax, insurance, fuel and car repairs and multiply by .85 (or whatever percentage you feel you can justify).

I'm just wondering where you got the figure of 85%?

My accountant has advised me that I can put all my motoring expenses through the business.

srsly78

If you only use the car for work then yes you can claim 100%. Trying to expense personal usage however is fraud. In cases of shared usage there will be a justifiable percentage that can be claimed. Working out (and proving) this percentage is the tricky part.

Alan Shore

You can put all you motor expenses through the business but for tax purposes you are only entitled to the business element of the expenses.

So if in a year you drive 10,000 kms and 6,000 of those are for business then you are only allowed 60% of the motor expenses for the year.

Gloomtastic!

The Dagda wrote: »

I'm just wondering where you got the figure of 85%?

My accountant has advised me that I can put all my motoring expenses through the business.

My accountant, when I used to have one, told me.

The Dagda

Gloomtastic! wrote: »

My accountant, when I used to have one, told me.

So the 85% you mentioned is arbitrary? I thought as much.

barneystinson

The Dagda wrote: »

So the 85% you mentioned is arbitrary? I thought as much.

As arbitrary as your 100%!

If your 100% includes both private and business mileage and you haven't disallowed any of it to work out your taxable profit then you will be in for a nasty surprise if/when you get an audit.

The Dagda

barneystinson wrote: »

As arbitrary as your 100%!

If your 100% includes both private and business mileage and you haven't disallowed any of it to work out your taxable profit then you will be in for a nasty surprise if/when you get an audit.

Mileage and expenses are not the same.

Alan Shore

The Dagda wrote: »

Mileage and expenses are not the same.

Indeed, in this context
Expenses an expense or expenditure is an outflow of money to another person or group to pay for an item or service, or for a category of costs.

Mileage is literally a distance measured in miles of cars.

@The Dagda perhaps you could clarify if by putting 100% of your motor expenses through your business you mean claiming 100% of the motor expenses for tax purposes and that you do not use this vehicle for personal use. If this is the case then 100% of the expenses is 100% correct.

The Dagda

Alan Shore wrote: »

Indeed, in this context
Expenses an expense or expenditure is an outflow of money to another person or group to pay for an item or service, or for a category of costs.

Mileage is literally a distance measured in miles of cars.

@The Dagda perhaps you could clarify if by putting 100% of your motor expenses through your business you mean claiming 100% of the motor expenses for tax purposes and that you do not use this vehicle for personal use. If this is the case then 100% of the expenses is 100% correct.

I'm not sure if you are being obtuse here, but in the context of the OP, and subsequent "discussion", there are 2 ways of being reimbursed for use of a personal vehicle in a business;

1. Kilometric Rates (Mileage) - where one claims for each kilometer travelled (in business)

2. Reimbursement of Actual Costs (Expenses) - where the actual costs of business motoring are reimbursed. Fuel, Tyres, Maintenance, Tax, Insurance etc.

One can only use one of the above methods to be reimbursed.

Gloomtastic suggested that there was a set rate of 85% for the expenses method. I dispute that there is such a rate.

If you use the Expenses method and the total amount, whether personal or business usage, is less than the business Mileage amount would be, then you can claim for 100% of your expenses.

This is the advice to me from my accountant.

Gloomtastic!

The Dagda wrote: »

Gloomtastic suggested that there was a set rate of 85% for the expenses method. I dispute that there is such a rate.

I said 'up to 85%'. Bit of a difference me thinks......

The Dagda

Gloomtastic! wrote: »

I said 'up to 85%'. Bit of a difference me thinks......

No difference, there is no defined limit.

Alan Shore

Ok guys, play nice.

The OP is a sole trader, in the context to only correct use of the term "mileage" is as a measure of distance.

A sole trader can pay all the motor expenses that they incur from a business bank account that's fuel, motor tax, car insurance, repairs, loans/leases/hps ect.

When computing their adjusted profit for tax purposes they should calculate the amount of business mileage over the total mileage for the year.

There is no set rate as every individual will have a different %. On the basis that you would have to know the total motor expenses at the start of the year and the total distance travelled to calculate a rate for your mileage I don't see it as a runner. I hope that you are not referring to civil service mileage rate as these are not appropriate in a sole trader case.

As for your explanation I can't make sense of it, perhaps there is a then where there should be than.

The Dagda

Alan Shore wrote: »

Ok guys, play nice.

The OP is a sole trader, in the context to only correct use of the term "mileage" is as a measure of distance.

A sole trader can pay all the motor expenses that they incur from a business bank account that's fuel, motor tax, car insurance, repairs, loans/leases/hps ect.

When computing their adjusted profit for tax purposes they should calculate the amount of business mileage over the total mileage for the year.

There is no set rate as every individual will have a different %. On the basis that you would have to know the total motor expenses at the start of the year and the total distance travelled to calculate a rate for your mileage I don't see it as a runner. I hope that you are not referring to civil service mileage rate as these are not appropriate in a sole trader case.

As for your explanation I can't make sense of it, perhaps there is a then where there should be than.

How do we know the OP is a sole trader?

Alan Shore

Vamp369 wrote: »

Hi,

I'm a self employed.

I would take that to mean they are a sole trader.

srsly78

I'm self-employed too, but I am not a sole trader.

Alan Shore

Employees are entitled to be reimbursed at a rate per km up to the civil service rate. http://www.revenue.ie/en/tax/it/leaflets/it51.html

Self employed people - sole traders, partners or what ever else srsly78 may be are entitled to pay motor expenses out of their business account but should only claim the business portion for tax purposes.

barneystinson

The Dagda wrote: »

If you use the Expenses method and the total amount, whether personal or business usage, is less than the business Mileage amount would be, then you can claim for 100% of your expenses.

This is the advice to me from my accountant.

Your accountant is 100% wrong.

The Dagda

barneystinson wrote: »

Your accountant is 100% wrong.

Really?!

revenue.ie seems to confirm it;

(B) Reimbursement by reference to actual costs incurred

Where motoring / bicycle expenses are reimbursed by employers to employees on the basis of actual costs incurred,
then the amount so reimbursed will generally not exceed the amount which would be payable in respect of the allowable business trips under the prevailing schedule of Civil Service rates

http://www.revenue.ie/en/tax/it/leaflets/it51.html

Alan Shore

Are you serious? Where is Mr Incognito to put a stop to this!

The Dagda

Alan Shore wrote: »

Are you serious? Where is Mr Incognito to put a stop to this!

What has you confused now Alan?

Alan Shore

Your accountant told you something. You keep quoting what they said. You appear to consider the opinion of others to be wrong despite the fact that they do this everyday.

Now you are quoting revenue in relation to the reimbursement of expenses for EMPLOYEES.

A self employed person is not an employee.

barneystinson

The Dagda wrote: »

Really?!

revenue.ie seems to confirm it;

(B) Reimbursement by reference to actual costs incurred

Where motoring / bicycle expenses are reimbursed by employers to employees on the basis of actual costs incurred,
then the amount so reimbursed will generally not exceed the amount which would be payable in respect of the allowable business trips under the prevailing schedule of Civil Service rates

http://www.revenue.ie/en/tax/it/leaflets/it51.html

That relates to employees/directors, everyone else except you has been talking about sole traders.

If you're a company director and your accountant has had you drawing legitimate motor expenses at less than civil service rates, whilst also drawing a salary and paying tax, then you need a new accountant.

The Dagda

Alan Shore wrote: »

Your accountant told you something. You keep quoting what they said. You appear to consider the opinion of others to be wrong despite the fact that they do this everyday.

Now you are quoting revenue in relation to the reimbursement of expenses for EMPLOYEES.

A self employed person is not an employee.

You're embarrassing yourself now.

Everyone who works is an EMPLOYEE.

Being self employed just means that you're employed by a company that you own.

That company can be sole trader, limited company or partnership.

barneystinson

The Dagda wrote: »

You're embarrassing yourself now.

Everyone who works is an EMPLOYEE.

Being self employed just means that you're employed by a company that you own.

That company can be sole trader, limited company or partnership.

Oooooooh dear!!

Cringe!

The Dagda

barneystinson wrote: »

That relates to employees/directors, everyone else except you has been talking about sole traders.

If you're a company director and your accountant has had you drawing legitimate motor expenses at less than civil service rates, whilst also drawing a salary and paying tax, then you need a new accountant.

The OP has not said whether he is a sole trader or not. There was no mention of sole traders until Alan mentioned it, so I don't know where you got "everyone" from??!!

My accountant does not "have me" doing anything. Thanks for your concern though, Barney :rolleyes:

Alan Shore

The Dagda wrote: »

That company can be sole trader, limited company or partnership.

Fair enough, if you think that a company is a sole trader then I'm not going to explain the tax treatment to you again.

Kind regards.

The Dagda

Alan Shore wrote: »

Fair enough, if you think that a company is a sole trader then I'm not going to explain the tax treatment to you again.

Kind regards.

To create a business as a sole trader you have register with the COMPANIES Registration Office.

Are there differences between a Sole Trader and a Limited Company? Certainly.

Do we know definitively the OP is a Sole Trader? No.

Kind regards.

barneystinson

The Dagda wrote: »

To create a business as a sole trader you have register with the COMPANIES Registration Office.

Seriously, you're just heaping nonsense on top of nonsense now! Where are you getting this stuff from?!

If you didn't have so many posts I'd be full sure you're trolling!

But by all means, keep digging!