My name is Paul Clifton. I'm a Chartered Certified Accountant and work for myself as an Accountant operating in North Leeds and help smaller businesses and their owners with their accounts, business and taxation. I'm one of the moderators and have been asked by Stewart to comment on your questions.
People think that they need receipts and proof of purchase to claim a business cost. This is not what the law says. You just have to demonstrate that you’ve bought the item. Even a gift to you of an asset, e.g. a computer, that you bring into the business, can be claimed as a business cost at its cost to the person giving it to you.
I’m assuming that you are a sole trader (i.e. not a limited company). It does not matter if you used the ‘business’ or ‘private’ bank account. It’s all the same from a tax viewpoint. There’s no need to reimburse yourself. It may be helpful for all business costs to go through a single business bank account so they are all in one place, which makes recordkeeping and accounts and Tax Returns easier at the year end.
With respect to cars & mileage, as John has indicated, you have two choices.
Claim 45p per business miles (up to 10,000 miles per tax year). After 10,000 miles in the tax year, if you do that much, then you claim 25p per mile. Start again each tax year (5 April) with the 10,000 counter
Add up all the ‘costs’ of running the car each year and claim the business percentage. Cost = fuel, repairs, road tax & insurance. Included in the ‘costs’ each year will be part of the cost of the car. You do not claim all the cost of the car in the first year. You have to claim tax deprecation (i.e. capital allowances) over a number of years. You either claim 10% or 20% of the market value of the car when first used into the business as your capital allowances / tax depreciation. The rate depends on the CO2 emissions of the car. If over 160 grams of CO2 you claim 10% else 20%
You need to keep a mileage log for both, obviously more detailed for the first. For the second you are just trying to calculate the business percentage.
You also need to differential business and private mileage. This split is not always obvious and depends where you work and are based.
All of the above is something that your accountant should be guiding you with. I help businesses like yours every day with these types of questions. I have been appointed account for a few businesses that Stewart has asked me to help out.
Whilst you are trying, rightly, to understand, your accountant should be a good place to talk these issues through with. There are lots of pit falls in not getting correct advice. Advice on issues like this is not complex for a high street accountant and need not be expensive.
If you would like to discuss this or similar questions with me then please phone me on 0113 225 2232 or email me at email@example.com
I’m happy to meet with you and give you an hour’s free advice on all these start up issues if you are thinking of appointing an accountant and would consider me.
I have a few help sheets on matters like this. If you send me your email address, I’ll forward you one. Please do feel free to telephone me. It sounds like as well as these replies that you need an accountant anyway.