Self employed advisory fuel rates guide

Chris Andreou

April 21, 2021

advisory fuel rates guide

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What are advisory fuel rates?

Advisory fuel rates are recommended repayment amounts a company can use when reclaiming the fuel element on business mileage

The rates are used to calculate: 

  • How much employers should reimburse employees for business travel using the company car
  • How much employees need to repay employers for private travel using the company car
  • The VAT you can claim back on business mileage using your personal vehicle

What are the advisory fuel rates?

Current Advisory Fuel Rates
Current Advisory Fuel Rates

Additional points to note

  • The rates indicated in the final column are for fully electric cars. For hybrid cars, refer to the petrol or diesel rate. Electricity is not considered to be a fuel for car fuel benefit purposes. 
  • These rates should not be used for vans. 
  • These rates apply from 1st June 2019. The previous rates can be used for up to one month starting from the date that the new rates apply. 
  • The rates are updated every quarter (March, June, September and December). The latest rates can be viewed on the HMRC website, and you can also refer to previous rates here. 
  • Record keeping requirements: You'll need to keep fuel receipts for your VAT records. Simplify your record keeping processes by using apps with receipt scanning and storing features, such as Shoeboxed or Expensify.

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Limited Company Expenses Guide

Advisory Fuel Rates Calculation

Here's an example:

Henry is an employee driving a petrol car with 1,600cc capacity. This is a company car, and it has been used for 10,000 business miles. 

The cost of fuel is:  10,000 x 15p = £1,500 (inc VAT at 20%)

The VAT portion of the cost is: £1,500/ 120 = 12.5 

12.5 x 20 = £250

Using this example, £250 of VAT can be claimed on HMRC on the employer's VAT return.

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What's Inside:

  • Allowable business expenses
  • Employee expenses
  • Travel expenses
  • Office & equipment expenses
  • Professional services expenses
  • General expenses
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Limited Company Expenses Guide

What's Inside:

  • Allowable business expenses
  • Employee expenses
  • Travel expenses
  • Office & equipment expenses
  • Professional services expenses
  • General expenses

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claiming mobile phone expenses self employed guide
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Can I expense my use of home as an office?

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Can I expense Foreign exchange costs?

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Limited Company Expenses Guide Guide

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Self Employed Registration Guide

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Can I expense Professional fees?

The costs incurred for engaging professional services-such as hiring an accountant, lawyer or architect-can be claimed as an allowable expense, as long as these services are carried out solely for business purposes.

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Can I expense Parties (or staff entertainment)?

As a limited company director, you can can claim for the costs of hosting a staff party, as long as the following conditions apply:

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Can I expense Phone calls?

As a sole trader:

If you're using your mobile phone line for both business and personal use, you can't claim for line rental. However, you can claim for call costs for business use if you obtain an itemised bill. If you have a separate mobile phone line for business use, you can claim the costs incurred.

As a limited company director:

1. Mobile phone: If your mobile phone contract is between your company and mobile phone provider, and is used for solely business purposes, you can claim the entire bill as an allowable expense.

If you have a personal contract, you can claim for the costs incurred for business calls. You're also able to reclaim the VAT element of the business calls.

2. Landline: If your landline contract is solely for business use, you can claim the cost as an allowable expense. You can also claim for business calls you've made using your home phone line.

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Can I expense Home Rental?

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Can I expense Pensions?

As a sole trader, you can't claim pension contributions as a deductible expense. However, you can get personal tax relief from contributions you make into your pension scheme.

If you're a limited company director, you have the option of making pension contributions through your company. This will reduce your company's profits, and as such reduce the amount of corporation tax your company pays.

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Can I expense Computer purchases?

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Do I have to pay tax on expenses? Guide

Do I have to pay tax on expenses?

You do not need to pay tax on allowable business expenses. These are essential business costs that are incurred "wholly and exclusively" for the purposes of running the business. They can be deducted against your income, thereby reducing the amount of tax that you need to pay.

For further information on the types of expenses you can claim, refer to our guides for sole traders and limited company directors.

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How do I register as a Sole Trader? Guide

How do I register as a Sole Trader?

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Do I need to retain expense receipts? Guide

Do I need to retain expense receipts?

You need to keep your receipts for expenses for at least five years after the 31 January submission deadline for the relevant tax year.

It helps to minimise paperwork wherever possible, so we recommend taking a picture of your receipts and storing these images away digitally. You can use cloud storage platforms like Dropbox or an expenses app like Expensify.

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Can I expense Christmas gifts for staff?

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Can I expense Trivial benefits?

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Can I expense Ebay charges?

Yes, you can claim eBay fees, such as the insertion fee and final value fee as deductible expenses.

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How long do I need to keep accounting records for? Guide

How long do I need to keep accounting records for?

You must keep your records for at least 5 years after the 31 January submission deadline of the relevant tax year.

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Can I expense a Car or Motor vehicle purchase? Guide

Can I expense a Car or Motor vehicle purchase?

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Can I expense a Bicycle or use the Cycle to Work scheme?

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Can I expense Conference expenses? Guide

Can I expense Conference expenses?

Yes, you can claim the costs of attending business-related conferences as a deductible expense.

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Can I expense Training costs? Guide

Can I expense Training costs?

Professional development costs can be claimed as an allowable expense, as long as the course content directly relates to your trading activity.

Training courses that you attend to learn a new skill-which you can use to expand into a new industry or offer different services-aren't allowable, unless you can show that these courses are helping you build up on your existing skills or knowledge.

For further information on allowable business expenses, refer to our expenses and allowances guides for limited company directors and the self-employed.

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Can I expense Postage? Guide

Can I expense Postage?

You can claim postage costs as a business expense.

For further information on allowable business expenses, refer to our expenses and allowances guides for limited company directors and the self-employed.

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Can I expense Clothing? Guide

Can I expense Clothing?

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Can I expense Business Rates?

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Can I expense Cleaning?

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Self employed advisory fuel rates guide Guide

Self employed advisory fuel rates guide

Advisory fuel rates are recommended repayment amounts a company can use when reclaiming the fuel element on business mileage.

The rates are used to calculate:

  • How much employers should reimburse employees for business travel using the company car
  • How much employees need to repay employers for private travel using the company car
  • The VAT you can claim back on business mileage using your personal vehicle
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Christmas Company Expenses Guide Guide

Christmas Company Expenses Guide

  • Christmas expenses overview
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Can I expense Computer equipment? Guide

Can I expense Computer equipment?

Yes, you can claim the purchase of computers as a deductible expense.

For further information on allowable business expenses, refer to our expenses and allowances guides for limited company directors and the self-employed.

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Can I expense Stationery? Guide

Can I expense Stationery?

Yes, you can claim office costs (such as the purchase of stationery) as a deductible expense.

For further information on allowable business expenses, refer to our expenses and allowances guides for limited company directors and the self-employed.

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Can I expense a Laptop? Guide

Can I expense a Laptop?

The portability of a laptop brings in a layer of complexity, as they tend to be purchased for both business and personal use. You can claim it as an expense, but you will need to apportion between business and personal use.

For further information on allowable business expenses, refer to our expenses and allowances guides for limited company directors and the self-employed.

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Why are expenses important? Guide

Why are expenses important?

Expenses are important as you can claim them against your revenue, which helps to reduce the amount of tax you need to pay.

For further information on the types of expenses you can claim, refer to our guides for sole traders and limited company directors.

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Can I expense Hire and rental charges? Guide

Can I expense Hire and rental charges?

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Can I expense Food & drink? Guide

Can I expense Food & drink?

You can claim "reasonable" food and drink expenses when you're travelling for business, if:

  • You're making an occasional business trip outside of your normal pattern of travel
  • You're staying overnight, and are also claiming accommodation costs
  • Your trade is, by nature itinerant

For further information on allowable business expenses, refer to our expenses and allowances guides for limited company directors and the self-employed.

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Can I expense Utilities? Guide

Can I expense Utilities?

If you're renting an office, you can claim utilities as a deductible expense.

If you're using your home as an office, you'll need to work out the proportion of your utilities that you can allocate to business use in order to claim these costs as a deductible expense.

For further information on allowable business expenses, refer to our expenses and allowances guides for limited company directors and the self-employed.

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Claiming mobile phone expenses when self employed Guide

Claiming mobile phone expenses when self employed

"Can I claim my smartphone as an expense?" is a simple, but a common question for first-time contractors.

That's because HMRC's expenses rules can be confusing, and while you want to be sure that you're running your business as tax-efficiently as possible, it's just as important to be in the good books of HMRC.

We've put together a short guide so you can get a quick overview of the basics. If there are any areas you're unsure about, you may check in with our accountants at Forma so you can be sure that you're claiming your limited company expenses correctly.

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Can I expense Meeting Room Hire? Guide

Can I expense Meeting Room Hire?

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Can I expense Fixtures and fittings cost? Guide

Can I expense Fixtures and fittings cost?

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Can I expense Annual Return/ Confirmation Statement fee? Guide

Can I expense Annual Return/ Confirmation Statement fee?

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Self employed tax obligations guide Guide

Self employed tax obligations guide

When you're self-employed, you have unique financial obligations-especially when it comes to paying your taxes.

When you work for a larger corporation, or even a relatively small business, your company takes on a large percentage of handling your tax responsibilities for you.

As a freelancer or small business owner, you're on your own. You work as an independent contractor for each of the clients you work for-and they don't take taxes out of your check before they send it to you.

How then should you handle the responsibility of paying your taxes?

This guide will help you get started:

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Can I expense Travel & subsistence? Guide

Can I expense Travel & subsistence?

You can claim travel-related expenses, as long as the travel is wholly and exclusively for business purposes and isn't considered 'ordinary commuting'. HMRC defines a commute as a trip that you make between your home and a permanent workplace.

You can claim for:

  • costs associated with running a car or vehicle, such as fuel expenses, parking fees and tolls.
  • transport fares for flights, as well as rides taken via train, bus, taxi and ferries
  • meals and accommodation for overnight business trips

You can claim "reasonable" food and drink expenses if:

  • You're making an occasional business trip outside of your normal pattern of travel
  • You're staying overnight, and are also claiming accommodation costs
  • Your trade is, by nature itinerant

For further information on allowable business expenses, refer to our expenses and allowances guides for limited company directors and the self-employed.

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What are the HMRC approved mileage rates? Guide

What are the HMRC approved mileage rates?

The HMRC approved mileage rates are as follows:

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Can I expense Business gifts? Guide

Can I expense Business gifts?

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What is a use of home allowance? Guide

What is a use of home allowance?

As a self-employed person, there are two ways to calculating the allowance you can claim for working from home. You can claim a fixed rate of £6 per week, or a proportion of household costs used by the business. Further information is available on our resource on the use of home allowance.

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7 Advantages of Being a Sole Trader Guide

7 Advantages of Being a Sole Trader

7 Advantages of Being a Sole Trader

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Can I expense car? Guide

Can I expense car?

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Can I expense childcare? Guide

Can I expense childcare?

As a sole trader, you can't claim childcare costs as a deductible business expense. However, you can claim tax relief through the tax-free childcare scheme.

As a limited company director, you can't claim childcare costs as a deductible business expense. However, you can claim tax relief through the childcare voucher scheme or tax-free childcare scheme.

For further information on allowable business expenses, refer to our expenses and allowances guides for limited company directors and the self-employed.

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Limited company expenses & tax allowances guide Guide

Limited company expenses & tax allowances guide

As a limited company director, you want to run your business in the most tax efficient way possible.

One way to achieve this is to claim for allowable business expenses correctly, so that you don't wind up having to pay more tax than you are legally obliged to.

It can be tricky figuring out what you can or cannot claim for, and this is where our guide comes into play.

We'll run through the different expenses you can claim for, but bear in mind that this isn't a definitive guide. Do check out our resource hub on limited company tax topics for more information, or consult our specialist accountants at Forma if you need personalised advice.

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Can I expense Domain Names? Guide

Can I expense Domain Names?

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Can I expense Bank charges? Guide

Can I expense Bank charges?

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Can I expense Repairs to equipment? Guide

Can I expense Repairs to equipment?

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Can I expense Charitable Donations? Guide

Can I expense Charitable Donations?

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How to claim for business mileage Guide

How to claim for business mileage

Being self-employed often means having to juggle multiple roles and tasks.

Amidst all your different responsibilities, keeping track of your business mileage can appear tedious-and it can easily become a task that you postpone time and time again. Yet, these little trips can add up, and as a small business owner, it's important that you make the most of what you can claim.

If you're newly self-employed, or just want to get a grasp on the basics of claiming your business mileage, this article is for you.

It explains the essentials, including how you can calculate your costs, the records you need to keep, and other important information that you need to be aware of.

Both business owners and employees can claim business mileage.

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Can I expense Entertainment or Dinners? Guide

Can I expense Entertainment or Dinners?

You can't claim for the costs of entertaining clients, suppliers and customers.

For further information on allowable business expenses, refer to our expenses and allowances guides for limited company directors and the self-employed.

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Can I expense agency fees? Guide

Can I expense agency fees?

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Can I expense Health insurance? Guide

Can I expense Health insurance?

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Can I expense Magazines, books & journals? Guide

Can I expense Magazines, books & journals?

The costs of purchasing magazines, books and journals can be claimed as a deductible expense, as long as these items are required for your business (e.g. trade publications, professional journals, training materials).

For further information on allowable business expenses, refer to our expenses and allowances guides for limited company directors and the self-employed.

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Can I expense Legal costs? Guide

Can I expense Legal costs?

The costs incurred for engaging professional services-such as hiring a lawyer-can be claimed as an allowable expense, as long as these services are carried out solely for business purposes.

For further information on allowable business expenses, refer to our expenses and allowances guides for limited company directors and the self-employed.

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Can I expense Insurance? Guide

Can I expense Insurance?

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Can I expense Subcontractor costs? Guide

Can I expense Subcontractor costs?

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Can I claim using the cycle to work scheme? Guide

Can I claim using the cycle to work scheme?

Employers who purchase bicycles and safety equipment for loan to employees can benefit from treating the purchase as capital expenditure eligible for corporation tax relief. VAT can also be claimed back on the purchase unless you are registered on the VAT flat rate scheme.

The loan of bicycles and safety equipment under the cycle to work scheme removes any tax charge to the employee that would usually arise on a taxable benefit.

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Can I expense Optical expenses? Guide

Can I expense Optical expenses?

You can claim an eye test as an allowable expense, if it is required for the use of visual display equipment in your work.

In general, you can't claim for glasses or contact lenses unless these items are 'wholly and exclusively used for business purposes', and you're able to prove that you don't use them outside of your working houses. One example would be that you have several pairs of glasses, one of which is used only when you're at work.

For further information on allowable business expenses, refer to our expenses and allowances guides for limited company directors and the self-employed.

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Can I expense Eye Tests/ Glasses? Guide

Can I expense Eye Tests/ Glasses?

You can claim an eye test as an allowable expense, if it is required for the use of visual display equipment in your work.

In general, you can't claim for glasses or contact lenses unless these items are 'wholly and exclusively used for business purposes', and you're able to prove that you don't use them outside of your working houses. One example would be that you have several pairs of glasses, one of which is used only when you're at work.

For further information on allowable business expenses, refer to our expenses and allowances guides for limited company directors and the self-employed.

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Can I expense Office rental? Guide

Can I expense Office rental?

Yes, you can claim office rental and the costs of using a coworking space as a deductible business expense.

For further information on allowable business expenses, refer to our expenses and allowances guides for limited company directors and the self-employed.

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Can I expense Airfares (plane tickets) and air travel? Guide

Can I expense Airfares (plane tickets) and air travel?

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Can I claim personally paid expenses? Guide

Can I claim personally paid expenses?

There may be times when you have no option but to use your personal funds to cover company costs such as paying by cash or if you forget to bring your company card. It's important to keep a copy of the receipt of all expenses but this is especially important when paying for costs and expenses personally. This way, a record of the cost can be kept, logged in your company accounts and then your company can reimburse you for this.

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Can I expense Taxi fares or an Uber? Guide

Can I expense Taxi fares or an Uber?

Taxi fares are generally deductible, as long as the fares aren't incurred for ordinary commuting. According to HMRC, a commute is a trip you make most days between your home and permanent workplace.

For further information on allowable business expenses, refer to our expenses and allowances guides for limited company directors and the self-employed.

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Can I expense Parking? Guide

Can I expense Parking?

You can claim parking costs as a deductible expense, as long as it is incurred wholly and exclusively for business purposes. Other allowable business travel expenses include tolls and congestion charges. You can't claim parking fines as a deductible expense.

For further information on allowable business expenses, refer to our expenses and allowances guides for limited company directors and the self-employed.

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Limited Company Expenses Guide