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Claiming your car expenses

Many GPs are confused by the rules on motoring costs. Continuing our series on financial MOTs, accountant Bob Senior clarifies the situation

Many GPs are confused by the rules on motoring costs. Continuing our series on financial MOTs, accountant Bob Senior clarifies the situation

"I have to have a car for work at the practice. But I genuinely need access to a second car in case the first car won't start. So I should be able to claim most of the costs against tax".

This is an optimistic view that over the years many GP's have put forward.

Sadly it is not one well received by HM Revenue and Customs.

Self employed GP's can claim a proportion of the running costs of their car based on the ratio of business to the non business mileage.

The costs that can be included in the calculation are:

• Fuel

• Servicing, repairs and MOT tests

• Car hire

• Insurance

• Vehicle Excise Duty (road tax)

• HP or bank loan interest

• Parking

• Cleaning and valeting

• Capital Allowances on the cost of the car

HM Revenue and Customs expect GP's to keep receipts for all the costs claimed for six years in case they need to inspect them.

They won't get too upset if the odd petrol receipt has been lost. But if none can be found then things could get a bit sticky.

This is particularly true of costs for cleaning and valeting where any Inspector of Taxes is going to take some convincing that a lot of money has been spent in the absence of receipts.

Having established how much has been spent on running the car the next piece of the jigsaw is to establish what proportion of the mileage was actually on business purposes.

Typically that would included the following journeys:

• Visits to patients

• Travelling to other surgeries

• Attending meetings

• Going to courses

It would not include any mileage going from home to your principal surgery or back.

In an ideal world a mileage log should be maintained for a three month period to establish a representative picture of business and private mileage.

This is the equivalent of a GP telling a patient to improve their diet and make sure they exercise three times a week!

In reality a mileage log for a shorter period would generally be an acceptable alternative.

The position is a little better for a locum since their principal place of business is usually their home. Hence any mileage from home to surgery would generally be regarded as business mileage.

Claiming for a second car is done in exactly the same way as claiming for the main car. The key point to remember is that the car must be used. Trying to make a claim just because you might need to use the car if the main one broke down will not usually be accepted.

If a GP or locum earns less than £64,000 per annum then an alternative, simpler, method can be used if they prefer.

If they wish they can simply keep a record of all the business mileage they do then apply a rate of 40p per mile to that and claim the result as their business motor costs.

This method avoids the need to keep a record of all motoring costs and often works best for GP's driving modest, or older, cars with low running costs.

Bob Senior is vice-chair of the Association of Independent Specialist Medical Accountants and director of medical services at Tenon, the UK's third largest medical accountant


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