I would be very grateful for any thoughts you have on the following issue. I have a small company (loss making in the first year), and throughout the first year I have paid for all mileage personally (this covers both business mileage and private mileage). I have not paid for any fuel through the company's bank account.
My question is that it is my understanding that I can reclaim 40p per mile for each business mile - is that correct? Does that mean that the company can reimburse this to me and I am not taxed on it? Does it also mean that the company can claim a deduction for the amount it pays to me?
Many thanks in advance for your help and thoughts,
You limited company can reimburse any business mileage at a rate of 45p per mile (it changed from 40p to 45p on 6th April 2011) for the first 10,000 miles and then 25p thereafter.
This cost (Business Miles only) is an allowable cost for the company and hence will reduce profits or increase loses accordingly.
Finally, if your company has not reimbursed these costs at your year end, then the amount owed can be added to your Directors Loan Account (I've assumed your a director) to be repaid in the future.
Thank you very much for such a prompt reply. Can I also do the same with any other business expenses that I paid personally - for example I paid for the business website personally and also for some stationery too. Is it ok to add them into the directors loan account too?
I have one more question I think, which is does my company only claim a deduction for the expenses when the amounts are paid to me through the director's loan account? Rather than the earlier accounting period in which I incurred the costs?
Thank you - I am hoping this is my last question on the subject!
The date that you incurred the cost is the accounting date and this is the date that appears in the accounts / bookkeeping.
The date that you reimburse the money is simply a journal (on the date the expenses where repaid) from your directors loan account to either cash or bank, depending how you where remibursed.
Please note that if you were to reimburse yourself each month that costs where incurred personally, then you would not need to use the directors loan account. You could simply Dr - each expense and Cr - how paid (e.g. bank).
