Well can use either the 45p method, claiming nothing else, aside from HP if relevant, or claim actual costs of running the car - insurance maintenance etc. USUALLY it is better to the claim the 45p upto 10000 miles, 25p >10000 miles.
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Johnny - Owner of an overly-active keyboard.
A man who can read, yet doesn't, is in no way wiser than a man who can't.
No problem. You can put everything through the books, to keep an eye on cash flow etc, yet you'd have to remember to add it all back when calculating SA.
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Johnny - Owner of an overly-active keyboard.
A man who can read, yet doesn't, is in no way wiser than a man who can't.
If they have previously claimed actual costs rather than the mileage they can't then switch to the mileage scheme with the same vehicle. If they change the vehicle they decide which option is best and stick to it.
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
You can put everything through the books, to keep an eye on cash flow etc, yet you'd have to remember to add it all back when calculating SA.
Hi Johnny,
I don't agree with that.
For things like depreciation that need to be added back as you are applying an accounting standard requirement.
For entertaining clients its actually a legitimate expense that is simply not allowable for tax purposes.
The case here though is surely ignoring the requirement that the books show a true and fair view of an entities affairs as one is effectively including the same expenditure twice. First as compensation to the business owner by was of mileage allowance and then by way of the actual expenditure being included.
Its not simply a matter of adding back as part of the self assessment calculation as the financial statements would be incorrect with motoring expenses overstated.
I stand to me corrected but to me the suggested treatment seems incorrect.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
CAn I clarify Shaun that you believe the correct treatment should be eg
Fuel 2500
RFL 140
Insurance 600
Repairs 360
Total Expenses . Motor Expense £3600
on the accounts
then when doing the SA it should be Motor Expenses eg 4500
which represents 10000 miles at 45p?
I've no set opinion on this but I've always calculated the actual cost to the business, which is £4500
The way I see it is that the fuel RFL and insurance etc are of no consequence to the business, as these are the owners own costs in running the vehicle. If these costs have been paid by the business I record them, calculate the difference and add it to Motor expenses.
I'm not saying I'm right btw so I'm interested in the ensuing debate
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
Hi, So if you've expenses paid from the bank, what are you reconciling against if the opposite entry is not in the books?
Not from the business bank account!
If the person is claiming mileage then they pay motoring expenses privately.
If money is taken from the business bank then it is drawings.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
CAn I clarify Shaun that you believe the correct treatment should be eg
Fuel 2500
RFL 140
Insurance 600
Repairs 360
Total Expenses . Motor Expense £3600
on the accounts
then when doing the SA it should be Motor Expenses eg 4500
which represents 10000 miles at 45p?
I've no set opinion on this but I've always calculated the actual cost to the business, which is £4500
The way I see it is that the fuel RFL and insurance etc are of no consequence to the business, as these are the owners own costs in running the vehicle. If these costs have been paid by the business I record them, calculate the difference and add it to Motor expenses.
I'm not saying I'm right btw so I'm interested in the ensuing debate
Hi John,
The only motoring expenses that I allow through the books that are not mileage (where the client is using mileage rates... Which in my case is all of them) are tolls and parking charges (neither of which are covered by the mileage allowance so are allowable).
If clients put (say) petrol on the company charge card that goes straight to drawings.
When balancing the books the mileage is taken to the capital account which in your example would balance off against what I had thown out to drawings.
At no stage is the integrity of the financial statements compromised.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
John we had this conversation before on one of your posts, well not exactly a conversation, plus if was for a director, yet... Tell me what is wrong with my method and performing a journal for the difference? If business bank is used also, makes sense.
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Johnny - Owner of an overly-active keyboard.
A man who can read, yet doesn't, is in no way wiser than a man who can't.
Sorry I completely misunderstood your reply to Johnny
Slightly different treatment between us but the end result is the same. Motor expenses would still show £4500
(I don't disagree with your way though)
Yes, either of our approaches work John.
My disagreement is what I believe that I am reading with Johnny where the figures are adjusted out in the SA calculation but the actual financial statements would surely be incorrect as certain motoring expenses would be included twice as both the actual cost and included within the mileage payment.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
John we had this conversation before on one of your posts, well not exactly a conversation, plus if was for a director, yet... Tell me what is wrong with my method and performing a journal for the difference? If business bank is used also, makes sense.
Ah, this may be one of those cases where what you wrote originally wasn't actually what you meant (sometimes I read back some of my own posts and think "thats not what I was trying to say at all!").
The key burried in there is that you are journaling the difference.
The original post read that you were treating it in a similar manner to depreciation in that it is something removed from the SA calculation rather than something that would need fixing in the accounts before getting to the SA calculation.
This is probably just one of those cases of a matter being lost in translation between what we mean and what we say.
The reality is, from what I am reading, that your method is closer to Johns approach (both mine and Johns give the same result but in different ways).
I note with John's that only either the actual expenses or the mileage will be present in the accounts at any time. Similarly with my approach the figures are automatically adjusted, at no stage is any figure double counted. The difference is that I do not need to apply a period end adjustment to replace the actual figures with the mileage. However, both of these appraoches are completely correct and at no stage is anything double counted in the accounts.
The only slight remaining worry with your approach as I am reading it Johnny is that if you include all of the figures throughout the year rather than just one of the two alternatives, then throughout the period they will be double counted (but I now believe fixed before issue).
I can actually see your cashflow arguement in that it shows how much money has gone out of the business, however, it misses that the process is flawed and the same money is being accounted for twice at both cost and within the mileage payment.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
In fairness the idea behind the method of using the business account is, it keeps things nice and tidy.
Admittedly if using the mileage rate, almost everything else it private use.
The method I use stems from, aside from the above - if the client voluntarily registers for VAT (as an oppose to reaching the threshold, as for SE mileage rate can't be used as we know) there may be grounds for a claim on input VAT, for recent services paid for - thus keeping everything in the business account helps if there is an inspection / investigation.
I know with bookkeeping a lot can be semantics, where one person will post x and y, another will post it differently - to post twice, would be silly.
Then going back to my VAT point, is it better to always ask for a VAT invoice in future just incase it can be reclaimed (for many example, not just motoring) upon registration? Thanks
-- Edited by abacus12345 on Thursday 14th of April 2016 05:52:35 PM
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Johnny - Owner of an overly-active keyboard.
A man who can read, yet doesn't, is in no way wiser than a man who can't.
John we had this conversation before on one of your posts, well not exactly a conversation, plus if was for a director, yet... Tell me what is wrong with my method and performing a journal for the difference? If business bank is used also, makes sense.
Funnily enough I went back to that thread today because I remembered I'd asked the question before.
You will see that my post to Shaun reflects your method, but I see nothing wrong with Shauns method either.
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
