PracticeConsultingUnderstanding tax

Understanding tax

Tax relief can be substantial on private car use - but many people are not making the full claims to which they are entitled.

Deloittes partner Alison Chapman says: ‘If the driver doesn’t factor in the benefit of the tax relief for business use of a private car, they may be making the wrong decision.’

Drivers have two ways of making a claim, by making a claim on the proportion of the actual expenses plus capital allowances, or using the fixed profit car scheme rate.

‘The employee can also make a separate claim for interest relief on a loan to purchase a car used for business purposes,’ she says.

Revenue officers will grant reasonable expenses, but will often require supporting invoices – and under the self-assessment code, failure to keep any documents supporting tax returns carries a maximum penalty of £3,000.

Return to Cash or car?Links

www.cartax.co.ukwww.cashorcar.co.uk

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