Can I claim my van insurance on my tax return?

As a business owner, you can reduce your tax bill by deducting certain business expenses, such as van insurance, from your profit. But if you use your van privately, as well as in a work …

As a business owner, you can reduce your tax bill by deducting certain business expenses, such as van insurance, from your profit.

But if you use your van privately, as well as in a work capacity, you can only claim a proportion of the costs. This is usually the ratio of your business mileage to your total mileage.

Work vans come with a wide range of benefits. Not only do they serve their main purpose of transporting bulky items from A to B, they’re ideal for creating awareness for your business, as you can advertise your company name and contact details on the side. Plus, you can adapt the inside to suit your specific business requirements. 

But having a van comes with its own set of challenges too. If you own it outright, you’ll be responsible for any repairs, while hiring or leasing usually means high-interest repayments. In both instances, driving a van can be costly.

The good news is, you can claim for a wide range of business expenses when you do your tax return. And that includes tax relief for travel expenses. 

In this article, we’ll go through which travel expenses you can claim for, any other tax relief you might be entitled to, how to submit your tax return and how HMRC decides whether you’re classed as self-employed.

Can I claim my van insurance on my tax return? 

As a business owner, there are a wide range of things you can claim for on your tax return, including travel expenses, like van insurance

If, however, you use your van privately, as well as for business purposes, you can only claim a proportion of the costs, which is usually the ratio of your business mileage to your total mileage and excludes travel between your home and place of work. 

Taxes can be complicated, especially when combined with insurance, so we’ve explained everything in more detail below.

What other travel expenses can I claim tax relief on? 

If you’re self-employed, how much tax you owe HM Revenue & Customs (HMRC) will vary depending on how much profit you’ve made in a tax year. 

But the UK government does recognise that running a business can be expensive, so it allows you to reduce your tax bill by deducting the cost of certain business expenses from your profit.

If you drive a van – or any other vehicle – for work purposes, you’ll be pleased to know that there are several travel expenses you can claim tax relief on.

Running costs 

As well as vehicle insurance, allowable travel expenses also include vehicle tax, fuel, parking, breakdown cover, vehicle license fees, repairs and servicing.

Mileage costs 

If you drive a van for work, you can claim a mileage allowance, which gives you 45p off your tax bill for every mile travelled up to 10,000 miles. You’ll then get 25p off for every mile you drive over 10,000.

Other travel costs 

Some of the other travel expenses you can claim for are train, bus, air and taxi fares, hire charges and meals and accommodation on overnight business trips. 

While you can claim travel expenses between different places of work, it’s worth noting that you can’t claim for non-business driving – and that includes travel between your home and workplace. 

Some of the other travel costs you can’t claim for are fines you incur while driving and the cost of buying your van – although you may be able to do this on capital allowances.

What other expenses can I claim tax relief on?

Some of the other allowable expenses self-employed business owners can use to reduce the amount of tax they owe are:  

  • Clothing costs, for example, uniforms and protective workwear
  • Staff costs, including pensions, agency fees and training courses 
  • Office, property and equipment costs, including stationery, rent, utilities and insurance 
  • Money spent on goods to sell on, such as raw materials and stock 
  • Legal and financial costs, like hiring a solicitor or architect 
  • Marketing, entertainment and subscriptions, such as advertising in newspapers and giving out free samples 
  • Training related to your business, like refresher courses 

Note that money taken from your business to pay for private purchases does not count as an allowable expense. And, if you use something for both business and personal reasons, you can only claim allowable expenses for the business costs.  

If you work from home, you should be able to claim a proportion of your costs for your electricity, heating, water rates, council tax, mortgage interest or rent, general maintenance and internet and phone use. When submitting your figures, you should consider the floor area or number of rooms you use for business and the proportion of time you spend working in the space. 

If you’re unsure as to whether a business cost is an allowable expense, contact HMRC for confirmation.

How do I file a tax return? 

You can file your tax return either online or by sending in a paper form. If you’re filing your return online, first you need to register for Self Assessment

The deadline for submitting paper returns is 31st October, otherwise you have until 31st January if you file your tax return online. It’s important not to miss the deadline, because you could face penalties if you’re late.

Even if you think you can’t afford the bill, you shouldn’t put off submitting your return, as a fine could leave you in a worse financial situation. Bear in mind that in some instances, you may be able pay your tax bill in instalments.

How to claim business expenses on your tax return 

It’s vital that you keep a record of all your receipts throughout the tax year (6th April to 5th April) as proof of your business expenses. When the time comes to file your tax return, add up all of your allowable expenses for the year and enter the total amount in the relevant space. 

Remember that if you drive your van privately, you can only claim a proportion of the costs, which is usually the ratio of your business mileage to your total mileage. As well as keeping all bills, it’s worth logging your business mileage over a representative period. 

You don’t need to send in proof of your expenses, but you should hold onto your receipts in case HMRC asks to see them. 

How does HMRC decide whether I’m self-employed?

UK taxpayers pay income tax in different ways, depending on their employment status. Most people pay income tax through PAYE, which is the system an employer uses to deduct income tax and national insurance contributions before wages are paid. Self-employed people will need to fill in a tax return each year and pay tax and national insurance contributions once the amount due has been calculated. 

If you work for yourself, you’re classed as a sole trader and are therefore self-employed. You’re likely to be classed as self-employed if you:

  • Run a business for yourself and are responsible for its success or failure 
  • Risk your own money 
  • Can choose how, when and where you work 
  • Have multiple customers at the same time 
  • Can hire employees at your own expense 
  • Are responsible for completing unfinished or unsatisfactory work in your own time and at your own expense 
  • Provide the main pieces of equipment you need to do your work, not just the small tools that many employees provide themselves 
  • Make a profit from regularly selling products or services 
  • Charge an agreed fixed price for a job, regardless of how long it may take 

If you run your own business, as well as working for someone else, you’ll be classed as both employed and self-employed. 

However, if you only sell items or provide services occasionally, HMRC may not class you as self-employed. You can check whether you need to declare this income on the government website.

Owners of limited companies are not classed as sole traders and pay corporation tax on business profits instead of income tax and national insurance.

Summary 

When you do your tax return you can deduct your business expenses from your profit to reduce the amount of tax you pay. This includes tax relief for travel expenses, such as van insurance. 

Some of the other travel expenses you can claim tax relief on are vehicle tax, fuel, parking, breakdown cover, repairs, train, bus, air and taxi fares, vehicle hire charges and meals and accommodation on overnight business trips. 

Non-travel related allowable expenses include clothing costs, staff costs, office, property and equipment costs, money spent on goods to sell on, legal and financial costs, marketing, entertainment, subscriptions and training courses. 

Note that if you use something for both business and personal reasons, you can only claim allowable expenses for the business costs. Similarly, you can claim travel expenses between different places of work, but you can’t claim for non-business driving, including travel between your home and workplace. If you use your van privately, as well as in a work capacity, you can only claim a proportion of the costs, which is usually the ratio of your business mileage to your total mileage. 

If you work for yourself, you’re classed as self-employed and will need to file a tax return each year. You can file your return either online or by sending in a paper form. You must keep a record of all your receipts throughout the tax year as proof of your business expenses. As well as keeping all bills, it’s also worth logging your business mileage over a representative period, as it will make submitting your tax return much easier. You don’t need to send in proof of your expenses, but you should hold onto your receipts in case HMRC asks to see them.

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