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Finance Bill: MPs back changes to landlord motor expenses

Tax Returns Deadline 2016
Victoria Barker
Written by Victoria Barker

Landlords should be able to use mileage rates in order to calculate their allowable deductions for motoring expenses, MPs agreed when discussing the Finance Bill at committee stage yesterday.

Trading businesses have been able to use mileage rates since 2013. Using mileage rates gives individuals the ability to use fixed rates per business mile, in order to calculate their allowable deductions for motoring expenses.

This simpler option is an alternative to deducting annual running costs and claiming capital allowances, and has not previously been available to landlords.

Yesterday’s discussions focused on Clause 36 of the Finance Bill.

Addressing the Committee, the Financial Secretary to the Treasury, Mel Stride MP, said that extending mileage rates to property businesses, which is what it being proposed in Clause 36, is ‘one of the most effective steps that we can take to simplify the tax system for landlords’, adding that it is a change that stakeholders asked for during a recent consultation.

The option to use mileage rate is only open to individuals and partnerships running property businesses who use cars, goods vehicles, or motorcycles for business purposes.

Corporate landlords and partnerships with corporate partnerships cannot claim deductions in this way.

Ms Stride said that the change will mean that more than 2.3 million property businesses will have the option to use mileage rates to calculate their allowable deductions for motoring expenses, and that it could provide ‘administrative savings to approximately 1.8 million property businesses.

“Mileage rates are also  available to landlords using the cash basis, bringing further simplicity to that group’s tax affairs.”

The RLA offers members advice through its tax centre, Rita4Rent. Michael Wright, Rita4Rent Director said: “The changes are certainly welcomed, as it gives landlords the option of either using the mileage rate or actual basis.  It will also bring landlords in line with the self-employed and employees.  The mileage rate is naturally the simpler option, and is another example of HMRC seeking to simplify the overall tax system.  That being said, whilst it is a simple system, we would still strongly recommend the use of a mileage log, showing details and reason for the journey, the date, number of miles traveled and so forth”.

The Committee agreed that the Clause should be within the Bill. This means that it will now progress to stage 4, the report stage, which gives all MPs an opportunity  in the main chamber of the House of Commons to consider further amendments to a Bill which has been examined in committee. A date for this has yet to be confirmed.

Don’t forget! The self-assessment tax deadline is two weeks away. Make sure you complete yours, and check out these helpful tips.

Find out more:

  • WATCH helpful videos on completing your self-assessment forms here.
  • The transcript of the debate can be accessed at:
  • The RLA run several tax courses delivered by an expert trainer. This includes Property Tax and Capital Gains Tax

About the author

Victoria Barker

Victoria Barker

Victoria is the Communications Officer for the RLA.

She is responsible for producing articles for our Campaigns and News Centre, the weekly E-News newsletter and media review, and creating social media content. She also contributes to our members magazine, Residential Property Investor.

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