Forum Message

Car and Business Insurance and Tax Disc

I have just bought a year tax disc for my car online and wondered how I should record this in Solar Accounts with regards to the Expense Category used - and specifically to VAT, whether this includes VAT and I can reclaim this.

Likewise, I have just renewed my Car Insurance for a year and wondered how I should also record this in Solar Accounts and what Expense Category to use, and whether VAT can be reclaimed on this.

I use the car to travel to customer sites, and have included business use to the insurance.

I have also just renewed my Business Insurance for one year, and again am unsure how to record this and what category expense to use. They have added IPT at 6%, so I changed the VAT rate to 6% - but am not sure if IPT is the same as VAT. This invoice has a VAT Reg number on it. I have put it in Uncategorised Expenses for now, as I was not sure what category to use for business insurance.

Thanks,
Steve.


Posted by Steve P on Oct 9, 2011 8:06 PM BST

Hi Steve,

It's really up to you to choose what is the most appropriate expense category - I would treat car insurance and car tax as a 'Motor Expense' and create a new expense account called 'Insurance' for the business insurance. If the car has personal and business use and you made the card payments from a business account then you will need to record two transactions for each payment - a normal expense and a non-business payment. See this page for details on recording non-business payments:
http://www.solaraccounts.co.uk/help/how-to-record-non-business-payments.php

My understanding is that insurance and car tax is exempt from VAT and that you cannot recover IPT through you VAT return (please check this with HMRC). You would therefore set the VAT rate to 0%.

Regards


Posted by Mark McLaren (Solar Accounts) on Oct 10, 2011 8:51 AM BST