Claim car expenses with your HMRC tax return

1 min Read Published: 16 Aug 2022

Claim car expenses with your HMRC tax returnIf you are self-employed make sure you claim tax relief on the cost of running any car used for business purposes when you complete your tax return.

Claiming car expenses with your tax return - how it works

HMRC makes a distinction between people who use their own car for business and those who use a company car or vehicle. Both types of ownership qualify as an allowable business expense but you'll have to submit your usage in different ways.

Using your own vehicle for work

You’ll need to have records of your business mileage, including:

  • locations of your journeys
  • distances you’ve travelled
  • the total amount of mileage allowance payments you’ve had

Using a company vehicle for work

  • You’ll need a summary of your calculation with any claim for relief on what you’ve spent.

Work out which car expenses you can submit with your HMRC tax return

Although HMRC describes allowable expenses as the cost of running your car there are a number of car expenses that you cannot claim in your tax return. Importantly, you must not include personal usage and for those who use a vehicle for personal and business reasons, it is wise to keep a clear record of mileage for each. It can be useful to separate the cost of personal use from business use by recording your trips and miles covered.

Some of the other costs of running a car that you can look to include are:

  • vehicle insurance
  • repairs and servicing
  • fuel
  • parking
  • hire charges
  • vehicle licence fees
  • breakdown cover

You cannot include the cost of:

  • non-business driving or travel costs
  • fines
  • travel between home and work (commuting)

Purchasing a car through a business

Buying a car for business use if you are self-employed can be claimed as a capital allowance. The way you claim your allowance is determined by your method of accounting.

Businesses using traditional accounting can claim the purchase of a vehicle as a capital allowance and those that use cash basis accounting can claim the capital allowance if they are not using simplified expenses.

If you use cash basis accounting and buy a car for your business, claim this as a capital allowance as long as you’re not using simplified expenses.