Soletrader Using the Stautory Mileage Rates

The statutory mileage rates of 40p/25p per mile is only available to business who have turnover under the current VAT threshold (£67,000 from April 2008). Using this method is intended to make things simpler for small businesses. It is not compulsory and you can only use the mileage rate basis if it is applied consistently from year to year. You can only change to or from an `actual' basis when a vehicle is replaced.

As you have exceeded the VAT registration threshold, you must continue to use the scheme until you change your car, at which point you can change to the “actual” basis of calculation where you claim expenses relating to running and maintaining the car (fuel,  oil , servicing, repairs, insurance, vehicle excise duty and  MOT costs) in addition to capital allowances on the cost of the new vehicle .

As you only change to the actual method after you replace the vehicle, it may mean that you will continue to use the scheme for several years after you have exceeded the VAT registration threshold.

Date published 5 Dec 2012

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.