Whether you’re self-employed or working for a company that doesn’t have a fleet of vehicles, it’s likely that you’ll end up using your personal car for business at some point in your life. This is often essential to your career, for travelling to see clients, attending meetings and conducting appointments.
However, using your own vehicle for business purposes incurs costs that you would otherwise have avoided. More miles on the clock also reduces the resale price of your car, losing you money in the long-run.
Discover what counts as business use when it comes to your car, how you can claim on your car-related costs, and the appropriate insurance cover for your work journeys.
What counts as ‘business use’?
One of the most common questions is whether your daily commute counts as ‘business use’. The answer is no: this is classed as a non-business activity and grouped under personal trips instead.
Work-related trips away from your office, on the other hand, are seen as ‘business use’. This includes everything from collecting a client from the train station to multi-day stays in distant destinations.
Can you claim car-related costs?
You can claim tax relief for business travel expenses including car-related costs. This includes overnight accommodation, meals and work phone calls as well as transport specifics such as parking fees.
However, you can’t claim for separate vehicle running costs such as fuel, services and road tax. Instead, you claim mile by mile based on an approved mileage allowance decided by HMRC. At the moment for cars this is 45p per mile up to 10,000 miles, then 25p per mile.
To make a claim, you’ll need to request reimbursement from your employer or – if you’re self-employed – add vehicle running costs to your self-assessment tax return. Make sure to record the details of each business journey, including the dates, mileage and vehicle used.
Getting the right car insurance
You must have the right car insurance if you’re planning to use your personal car for business purposes. Without business-specific insurance, you won’t be properly covered if you’re in a road collision while driving your car for a work journey.
You could consider temporary car insurance for short-term situations of using your own car for business trips. This is an affordable option that is nonetheless comprehensive. If you’ll be using your personal vehicle for work-related journeys on a regular basis, there are three categories of car insurance to choose from:
· Class 1: covers you for short business trips between different sites that are not your permanent workplace
· Class 2: as above but includes named drivers on your policy so that adding a co-worker is straightforward
· Class 3: extensive coverage for long distances, regular journeys and goods transportation