Purchased a Vehicle
Remember, while you cannot deduct the full car payment as an expense, you can claim capital allowances based on the CO2 emissions of the vehicle.
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For vehicles with CO2 emissions between 1 and 50 g/km, the Writing Down Allowance (WDA) is 18%.
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For vehicles with CO2 emissions above 50 g/km, the Writing Down Allowance (WDA) is 6%.
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For vehicles with CO2 emissions of 0 g/km (electric vehicles), you can claim 100% First Year Allowance (FYA), not a Writing Down Allowance.
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In summary of CO2 emissions:
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0 g/km: 100% FYA
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1 - 50 g/km: 18% WDA
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Above 50 g/km: 6% WDA
Alternatively, the Mileage Allowance Method for utilising your personal vehicle.
You can claim mileage driven for business purposes:
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For the first 10,000 miles driven, the mileage rate is 45 pence per mile.
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After the first 10,000 miles, the mileage rate decreases to 25 pence per mile.
If you choose to claim mileage using this method (known as the simplified expenses method for vehicles), you cannot separately claim the cost of your car (capital allowance), servicing, or insurance as business expenses.
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Leased a Vehicle
If you leased a car on or after 6 April 2020.
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The CO2 emissions of the leased car are over 110 g/km.
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In this case, you must disallow 15% of the hire charge or rental cost for tax purposes.
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Tax Deductible Expenses
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Fuel Costs: The expenses incurred for fuel used while driving for business purposes can be deducted.
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Vehicle Maintenance and Repairs: Costs associated with maintaining and repairing your vehicle, including servicing, repairs, and parts replacements, are deductible.
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Insurance Premiums: Premiums paid for private hire vehicle insurance are tax-deductible.
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Road Tax and Licensing Fees: The annual road tax and licensing fees required for operating a private hire vehicle are deductible.
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Vehicle Rental Costs: If you rent a vehicle for your PCO business, the rental expenses are tax-deductible.
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Cleaning and Valeting: Expenses for cleaning and valeting your vehicle, both interior and exterior, are deductible.
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GPS and Navigation Systems: The cost of purchasing and maintaining GPS navigation systems or smartphone apps used for navigation during work-related trips is deductible.
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Mobile Phone Expenses: Expenses related to using a mobile phone for business purposes, including calls, texts, and data, can be deducted.
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Parking and Tolls: The costs of parking fees and toll charges incurred during work-related trips are deductible.
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License and Permit Fees: Any fees paid for obtaining or renewing licenses or permits required for PCO driving are deductible.
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Safety Equipment: Expenses for safety equipment, such as high-visibility vests or dashcams, used while driving for business purposes, are deductible.
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Office Expenses: Costs related to maintaining a home office, such as internet and phone bills, may be partially deductible if used for business purposes.
Expenses Not Eligible for Tax Deduction
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Fines and penalties
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HMRC self assessment penalties and interest
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Lunches (except in certain circumstances)
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Clothing (unless branded)
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Remember to keep detailed records and receipts for all expenses to support your deductions when filing your taxes. Additionally, it's essential to ensure that expenses claimed are wholly and exclusively for business purposes.