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Tax treatment of car washing expenses

20 October 2016

Autumn is with us, the roads are getting dirty and our clients may be washing their cars more frequently.  Here is a brief summary of the tax issues to consider on car washing expenses:

  • If the employer meets the cost of a car wash for a company car, no tax liability will arise on the employee.  This treatment applies however the cost is borne by the employer, for example if it is paid directly by the company or reimbursed to an employee who paid for the car wash personally. HMRC accept that these costs are in connection with the company car so the reimbursement is exempt from tax.
  • If an employee pays for a car wash personally but is not reimbursed by the employer, he cannot claim a tax deduction for the unreimbursed expenditure. Such expenses are not incurred in the performance of his employment duties, so there can be no tax relief for costs he incurs personally without reimbursement.
  • An employee that uses their own car for business purposes cannot claim a tax deduction for car washing costs, and any reimbursement of such costs by the employer would be taxable.

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