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Can I claim for all of my motor expenses?

Let’s look at motor expenses in terms of income tax relief and whether or not you can reclaim the VAT.

Income tax relief

Motor expenses will include petrol, oil, maintenance costs, road fund licence, insurance, car cleaning and any other costs associated with the upkeep of the motor car. This is providing that you can demonstrate that the cost is wholly and exclusively for the purpose of your profession.

You will be able to claim against income tax the proportion of your motor expenses that relate to your practice. You will need to work out the overall business and private proportion of your mileage and you should do this by keeping a mileage log. Click on the link below to download a mileage log form:

Be aware of the fact that your principal place of business for this purposes will most likely be chambers, even if you do much of your work from home. Your mileage from home to chambers is not eligible business mileage.

There are special rules governing tax relief for car leasing. Generally speaking you can claim the leasing costs subject to deducting the private proportion. Ask for our advice if you are intending to lease a car with a market value in excess of £12,000 as the full leasing cost will not be tax deductible – there is a permanent disallowance of a proportion of the cost based on the application of a formula.

You can claim tax relief on the cost of car parking for the purpose of your business, but car parking at chambers itself is treated as part of the cost of travelling from home to principal place of business, and is not tax deductible.

Related literature:


Reclaiming the VAT

You are able to reclaim just 50% of the input tax for the cost of car leasing regardless of the price of the car.

With the exception of car fuel, you can claim back the VAT on all your motor expenses in full.

For car fuel, there are special rules. You claim back the VAT in full but work out the private proportion by reference to a scale charge. The scale relates to the engine size and whether the car is petrol or diesel. Click here to read the current rates from our Tax Guide. The scale charge is added to the output tax declared on your VAT Return and paid over as normal.

If your business mileage is very low, you may find that you are better off choosing not to reclaim any VAT on fuel and therefore avoid the scale charge entirely. We will work out which is the best option for you, based on your personal circumstances.

You are able to reclaim the VAT on business car parking. In contrast to the treatment of car parking at Chambers for income tax purposes, you are able to reclaim the VAT input tax.

Related literature:


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