Most of us use our personal vehicle for business purposes, it is therefore important to log the total distances travelled for all for business trips in order to claim back these expenses.
What can you claim?
The income tax system allows taxpayers who receive a travel allowance to claim a deduction for the use of their private vehicle for business purpose. Updating your logbook and recording your mileage and specifying each business trip will help you make an accurate claim when submitting your tax return.
How to claim
In order to claim a deduction you need to keep a record of all your vehicle’s odometer readings from the 1st March each year to the last day of February the following year .The opening and closing readings gives you the total kilometres travelled for the year. The actual amount travelled during a tax year and the distance travelled for business purposes substantiated by the log book are used to determine the costs which may be claimed against a travelling allowance.
Eighty Percent of the travel allowance paid to an employee is subject to a deduction of the employee’s tax. This 80% of the travel allowance must be included in the employee’s remuneration for the purpose of calculating Pay As You Earn (PAYE). The percentage is reduced to 20% if the employer is satisfied that at least 80% of the use of the vehicle for the year will be for business purpose. The full travel allowance must be disclosed on the employee’s tax certificate.
Contact PATC for any advice you may need with regards to business mileage or other claims.
