As an alternate to claiming vehicle running costs in the taxi driver accounts the mileage allowance can be claimed. Claimants cannot claim both for a specific vehicle in any one tax year. It is one or the other.
In years gone by maintaining accurate financial records of both vehicle running costs which includes, capital tax allowances, breakdown membership, fuel, repairs and maintenance, insurance and tax and the business mileage covered offered the choice to claim one or the other and reduce the tax liability by choosing the most expensive
The present mileage allowance for business journeys is 40p per mile for the first 10,000 miles and 25p per mile thereafter.
These mileage rates were set in 2002 and have not been updated since and still applicable for the current financial year commencing 6 April 2008. No taxi driver will need reminding of ther astronomical increase in fuel prices since 2002 which alone have doubled in the past 6 months, never mind the past 6 YEARS.
The refusal of government to increase the mileage allowance in line with the actual costs of operating a vehicle is a serious disadvantage to all taxi drivers in that the choice between mielage allowances and vehicle running costs is becoming obsolete.
Taxi drivers who prepare their own taxi driver accounts may wish to visit www.diyaccounting.co.uk/taxi.htm which has a taxi driver accounts package (priced at £11.99) written on excel templates that automatically produces an excel copy of the new tax return and compares vehicle running costs with mileage allowances, choosing the most expensive and lowest tax bill.