Forum Message

Motor Expenses

Hi there. Could you recommend the best way to log mileage expenses? I don't use a company car so it's a private vehicle, and I'm using flat rate VAT so that's not an issue. I think I can claim 40p per mile up to 10,000 miles, but how do I account for a monthly mileage of, say, 1000 miles? I need at some stage to pay myself back the mileage rate in some way.

In a similar way, how do I account for a percentage of electricity for home office use?

Many thanks!


Posted by Adam Robertson on Apr 21, 2009 11:27 AM BST

Hi Adam,

From the HMRC website (http://www.hmrc.gov.uk/paye/stepbystep-mileage.htm) the maximum approved mileage allowance payment for cars is 40p/mile up to 10,000 miles per year and 25p/mile after that. So if you travel 1,000 miles per month, the maximum tax-free mileage payment would be £400 for the first 10 months and £250 for the last two months. To record this payment, create a new 'Money Paid Out' transaction and allocate to the Motor Expenses account.

I'm not sure about how to split home office utilitity bills - I have read that it's based on the floor area of the office compared to the house, but you should check this with your accountant or tax office.

Regards,


Posted by Mark McLaren (Solar Accounts) on Apr 21, 2009 12:30 PM BST

Thanks, Mark, that's helpful. How do I then get the £400 out? If I write a cheque to myself and allocate it as 'owner's drawings', is that correct? I may be missing something, but would that make it something other than a drawing for tax purposes?

Thanks again!


Posted by Adam Robertson on Apr 21, 2009 1:26 PM BST

Hi Adam,

You could write a cheque to yourself and then set the Paid From account to 'Cheque Account'. The Allocate to Account field should be 'Motor Expenses'. In this way it's just like any other motoring expense.

Regards,


Posted by Mark McLaren (Solar Accounts) on Apr 21, 2009 1:45 PM BST

Thanks, Mark, I think I've got it. It's really a Money Out transaction from the business current account to me, but logging it as a motor expense. I imagine that would work for tax purposes.

I've been used to accounting packages that are, in retrospect, horribly over-complicated with limited ease-of-use. It's going to be difficult to get used to a new package that's so clear and intuitive!

Please create a Mac version (have I mentioned that already?)! :-)


Posted by Adam Robertson on Apr 21, 2009 2:29 PM BST

Thanks for the vote of confidence Adam. We're looking into doing a Mac version - or did I mention that already ;)


Posted by Mark McLaren (Solar Accounts) on Apr 21, 2009 6:08 PM BST