Helpful Notes When Preparing A Taxi Drivers Accounts To Save Money

Self-employed taxi drivers in common with other self employed businesses are required to submit a self assessment tax return form every year reporting the main totals from the taxi drivers accounts. The final submission day for these accounts to enable the taxes authorities to calculate the taxes payable is 30th September as the final deadline for submission from the self assessment tax return will be 31st January. Miss the 31st January deadline and the penalty good is 100 pounds.

The simplest treatment for preparing the taxi driver balances is to collect all the taxi receipts and expenses together, hand them over to an accountant who will prepare your self assessment tax return plus might charge between 150 to 450 pounds for the privilege. That is taxing. Taxi driver accounts does not be that taxing. You can prepare your taxi driver accounts and personal assessment tax return yourself yet do something.

These taxi driver notes in preparing the taxi operater accounts and completing the personal assessment tax return are to help that process.

Mileage Allowances

Taxi cab drivers can claim as an alternative to vehicle running costs mileage allowances associated with 40p for the first 10, 500 miles and 25p per kilometer thereafter. You may not claim mileage money and vehicle running costs. Should you choose to claim the mileage allocation then keep good records associated with mileage covered, purpose of journey.

Taxi cab Capital Allowances

If you bought an automobile in the financial year 2007-08 plus used the vehicle as a taxi you can claim a first year writing down taxes allowance of 25% of the cost from the taxi, restricted to 3, 000 pounds for vehicles costing over 12, 000 pounds. On vehicles purchased in previous tax years you can claim 25% writing down allowance for the balance not yet claimed. Many taxis are bought and sold each year plus where a taxi is sold the capital taxes allowance that can be claimed is the difference between your written down value for tax purposes and the amount of sale earnings. First year allowance on non vehicle assets in the current tax calendar year 2007-08 is 50% for smaller businesses.

Taxis bought on Hire Purchase

Claim capital allowances on the original cost of the vehicle, interest and other charges rely as business expenses and go ahead the self assessment tax return box 3. 61 Other Fund Charges

Taxi Running Costs

When completing the self assessment taxes return taxi drivers should enter fuel costs in box several. 46 cost of sales not car expenses. A standard check carried out by any competent inland revenue inspector enquiring into a self assessment tax return would be to check when the taxi cab driver was on holiday and look at if fuel receipts had been included for this period. Not many tax returns are enquired into as the system is based on trust but taxi drivers should ensure their accounts do not consist of this fundamental tax fiddle. Taxi cab running costs also include repairs, maintenance and parts including tyres, street tax, taxi insurance and AA/RAC membership. Include radio hire plus taxi office costs in general administrative expenses.

Household expenses

If you run your taxi business from home you can state a proportion of household expenses as business expenses in the taxi accounts. Household expenses are likely to be banned unless they are either specific towards the business or a specific area of your home is devoted entirely to your taxi company. Using part of a room part time may not be sufficient to include the household expenses in the taxi driver accounts.

Spouse Costs

You can claim expenses to get partners who work for your taxi business and payments up to hundred pounds per week would not attract tax or national insurance however any kind of payments claimed in the taxi car owner accounts must be real payments regarding real work done.
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The Revenue naturally adopt a strict approach to taxi expenses claimed for companion work as it is an area some people might use to reduce the tax liability. Care is required to justify the partner being an expense.

Other Expenses

Enter all business expenses in a named expense box on the self assessment taxes return. Avoid entries in container 3. 63 Other Expenses if possible as any significant amounts in this box may give rise to an Revenue enquiry into the self assessment tax return.

The best method of ensuring the taxi drivers tax bill is as low as possible later on is undoubtedly to meticulously maintain good records of all taxi receipts plus expenses and mileage covered which offers the opportunity for taxi drivers in order to the taxi running costs towards mileage allowances and choose the the majority of tax efficient option. The decision to claim mileage allowance or taxi cab running costs can and often really does change during the financial year. Generally when a more expensive taxi cab is purchased then the capital allowance of several, 000 pounds will often outweigh the potential mileage allowance although if the vehicle is low value the distance allowance might be the best option and a method of saving valuable tax pounds that you are entitled to. The best taxi accounting software will automate the comparison of taxi mileage allowances with taxi cab running costs doing the taxi accountants work for you.