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