Can a sole trader claim mileage and subsistence?

V

vicar

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Hi,
Have been operating as sole trader for a year now (whilst still holding down a full time PAYE job) and its finally time to bite the bullet and go out full time and give it a proper go. My question is can I claim susbsistence and mileage rates at civil service rates? I asked my accountant is it OK to do this as a sole trader and he says yes, but a lot of people have told me it can only be done if I register as a company(Ltd) . I'm a bit confused, and its not like I dont trust my accountant but I just want to make sure everything is done by the book. I I will be clocking up about 2000 miles per month but my registered office is at home.
Thanks for help in advance ..
 
Hi Vicar,

Ill move this to the taxation forum (from AABusiness) as it more closely reflects the question.

aj
 
Vicar,

Yes you definaltely can claim mileage and subsistence. you should read the rules before claiming any money. The fact that your place of business is your home might render the first 10 miles or so of your journey not allowable. There is a leaflet in the revenue web site.

Make sure you keep good records and after that your laughing. Good and allowable way of taking money from your business and get a deduction for it.
 
howareya said:
Vicar,

Yes you definaltely can claim mileage and subsistence. you should read the rules before claiming any money. The fact that your place of business is your home might render the first 10 miles or so of your journey not allowable. There is a leaflet in the revenue web site.

Make sure you keep good records and after that your laughing. Good and allowable way of taking money from your business and get a deduction for it.
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This advice is totally 100% incorrect. Civil service rates of mileage and subsistence can be claimed by employees and company directors but NEVER by self-employed individuals.
 
Still a bit counfused lads! Ubiquitous, if I cant claim mileage if your are self employed then how to you get your mileage back??
My accountant tells me that I can claim it!
 
ubiquitous said:
This advice is totally 100% incorrect. Civil service rates of mileage and subsistence can be claimed by employees and company directors but NEVER by self-employed individuals.
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I agree. A self employed individual will get a tax dedcution for mileage done provided its wholly and exclusively for the purpose of his/her trade.
An employee can claim mileage. A self employed individual cannot be an employee of his.her own trade. Whereas if through a company the director can be an employee
 
Still a bit counfused lads! Ubiquitous, if I cant claim mileage if your are self employed then how to you get your mileage back??
My accountant tells me that I can claim it!
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Just because you can't claim civil service rates does not mean that you can't claim anything - expenses incurred wholly and exclusively for business purposes can be claimed, in practice you'll probably be allowed a percentage of motor expenses, including wear and tear on the car etc. In any case, I'm sure your accountant will keep you right, as he probably has a number of other clients like yourself. It would probably be unwise to register a company if it can be avoided as that's one sure way to increase expenses and beauraucracy.
post crossed
 
Hi Glenbhoy,

Thanks for your reply, I'm very confused now! I spoke to my accountant and he maintains that even though I'm a sole trader (not a LTD co.) that I can claim mileage rates!!
Somebody somewhere is wrong but obviously as you can imagine I would expect my accountant to be right.
Might ring revenue to clarify....
 
in my opinion only a company or a partnership can claim mileage expenses. as a sole trader you cant claim mileage as such but can claim a percentage of waer and tear and travel expenses. the best thing you can do is to contact revenue but i would advise you to get their reply in writing as i find that different people in revenue give difefrent answers much the same as the answers above..........
 
The position for a sole trader is that he can claim .....expenses on an 'incurred basis' which are 'wholly and necessarily' incurred.

For the avoidance of any doubt, this is NOT mileage but is the actual expense incurred. There is a big difference. And as has been said keep all your receipts.

If you are own a company, you may use mileage rates.
 
My boyfriend is self-employed as a sole trader. He keeps all of his receipts for his diesel, food, accomodation if he has to stay overnight, stationery, heat and light, basically any business expenses. Some he can claim VAT back on, some not. At the end of the the year when he comes to do his accounts he subtracts expenses from gross profit and comes up with net profit (profit and loss account). Any expenses incurred go to reduce his tax bill. This is how he can "claim " expenses.

Obviously I'm simplifying it a bit, I suggest you go and talk to your accountant again.

Sorry forgot to say that you can also claim for depreciation on your car. My boyfriend prepares his accounts himself, including his VAT return very 2 months, it's not difficult and you can reduce your bill at the accountant (Accoutnants fees are also allowable as expenses BTW!)
 
Marianne S said:
Sorry forgot to say that you can also claim for depreciation on your car. My boyfriend prepares his accounts himself, including his VAT return very 2 months, it's not difficult and you can reduce your bill at the accountant (Accoutnants fees are also allowable as expenses BTW!)
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Is there any book outthere that covers this topic ie. doing irish tax returns yourself/expenses that can be claimed etc.

I am fairly confident that I will be turning self employed in '07 - and therefore I would like to familiarise myself with this sort of stuff beforehand.
 
vicar said:
Hi,
Have been operating as sole trader for a year now (whilst still holding down a full time PAYE job) and its finally time to bite the bullet and go out full time and give it a proper go. My question is can I claim susbsistence and mileage rates at civil service rates? I asked my accountant is it OK to do this as a sole trader and he says yes, but a lot of people have told me it can only be done if I register as a company(Ltd) . I'm a bit confused, and its not like I dont trust my accountant but I just want to make sure everything is done by the book. I I will be clocking up about 2000 miles per month but my registered office is at home.

I'd be more concerned about expenses claimed as your office is at home. Make sure you don't claim too much of the household expenses. If you do and you want to sell your house at a later stage, there may be a capital gains liability!
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the difference here is that as a sole trader you can claim back what it cost you to travel 1 mile or what it actually cost you for your lunch - eg
travel 10 miles @ cost of say €1.20 in diesel - you claim €1.20 in diesel.

For a LTD company Director - travel 10 miles - claim mileage @ civil service rates - ie €1.2423 per mile for first 4000 miles p.a. and €0.5739 per mile thereafter. ie - you claim €12.423 in expenses (if in early part of year) or €5.739 after 4000 miles.

For subsistence - sole trader - lunch cost €5 - claim back €5
ltd - claim back €16.32 per day whether you eat or not !

there are some additional limits set in relatio nto subsistence but I don't have them to hand - I think if you're LTD you can only claim for first 90 days per particular client or location.....
 
I had a look for some books on the subject but to be honest you don't really need one. The accountant showed us how to do the bookeeping and gave us a set of accounts from a client (obviously personal information and identifiers were blacked out). She also said she'd look over the accounts once we've completed them to see if they were correct.A school accounting book would be more than enough if you really wanted to get one.
 
Hi

As far as claiming for lunches go, Revenue claim that people need to eat in order to live, not to do their job and so it can't be claimed by a self employed person. Exception may be when 'travelling' and you have to eat in restaurants. I'm self employed and don't keep receipts or get tax back for lunches but I do for teabags and coffee.

As far as mileage goes you can claim back every amount actually spent according to the receipts you have, only in proportion to buisness / private use of the car. You can't claim VAT back on petrol but you can use the VAT component to reduce your profit at the end of the year.

Cheers
Joe
 
im sure nai is correct. vicar i would worry about my accountant if he told me that. for a sole trader you would have to keep your receipts as a ltd company director you could claim subsistance/motor expences. the revenue have a very simple easy to understand leaflet on this . i think its called the it 51. . i hope this works. im sure it is the correct one. if not check oasis.gov.ie and you can do a search there.
 
JoeBallantin said:
Hi

As far as claiming for lunches go, Revenue claim that people need to eat in order to live, not to do their job and so it can't be claimed by a self employed person. Exception may be when 'travelling' and you have to eat in restaurants. I'm self employed and don't keep receipts or get tax back for lunches
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Well I'm a self-employed sole trader but I don't work from home, so my lunches (take-away sambos from local Centra) are tax-deductible. I don't think the Revenue take the view that I should either go home for lunch or bring in my own home-made sambo............although in that case, I'd be claimeing the price of bread, butter and ham from the weekly shopping.
 
Well I'm a self-employed sole trader but I don't work from home, so my lunches (take-away sambos from local Centra) are tax-deductible. I don't think the Revenue take the view that I should either go home for lunch or bring in my own home-made sambo............although in that case, I'd be claimeing the price of bread, butter and ham from the weekly shopping.
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Hi

Gordanus I think you're incorrect.

PAYE workers get no allowances for lunches and that's the point, they have to supply their own sustinence during working hours.

You are eating in order to stay alive, do you also bill your clients for food eaten while you were working for them? Are you permitted to eat in fancy restaurants and use that expense to reduce your profit?

Before you say that the expenses have to be reasonable Revenue don't work in that way. If an allowable expense is incurred it can be claimed even if there are identical services available for half the price.

If you suffer an audit I believe personnal lunch expenses will be questioned, and may cause a more severe audit (in my opinion).

Cheers
Joe
 
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