Petrol Expense/Receipt
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Hi,
This might sound like a bit of a "basic" question to some, but i haven't dealt with petrol expenses for quite a few years so would like a bit of clarification from someone who can remember...
I do bookkeeping for a number of clients, but have one main one. Approx 3 times a month the client wants me to visit their offices that are 30 miles away, for which it was agreed when i took on their engagement that they would pay me 40p a mile for.
I now need to account for this in my books/tax return, however i can't remember the correct way of doing this...
I invoice them for this charge in with my monthly invoice for services carried out. I need to know if i would;
a) account for the mileage paid to me as a normal income figure (ie.add it to my fee) and then claim back the actual cost of the petrol (using petrol receipts)
or
b)account for it as part of my income but then directly off-set it with a payment of 40p per mile to myself for a "mileage allowance".
or
c)not account for it at all?!
(i know c) is probably not the right answer...!)
The different ways of accounting create different tax liabilities so i want to make sure that i use the right one!
Any help would be greatly appreciated.
Mel :?:
This might sound like a bit of a "basic" question to some, but i haven't dealt with petrol expenses for quite a few years so would like a bit of clarification from someone who can remember...
I do bookkeeping for a number of clients, but have one main one. Approx 3 times a month the client wants me to visit their offices that are 30 miles away, for which it was agreed when i took on their engagement that they would pay me 40p a mile for.
I now need to account for this in my books/tax return, however i can't remember the correct way of doing this...
I invoice them for this charge in with my monthly invoice for services carried out. I need to know if i would;
a) account for the mileage paid to me as a normal income figure (ie.add it to my fee) and then claim back the actual cost of the petrol (using petrol receipts)
or
b)account for it as part of my income but then directly off-set it with a payment of 40p per mile to myself for a "mileage allowance".
or
c)not account for it at all?!
(i know c) is probably not the right answer...!)
The different ways of accounting create different tax liabilities so i want to make sure that i use the right one!
Any help would be greatly appreciated.
Mel :?:
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Re:Petrol Expense/Receipt
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Re:Petrol Expense/Receipt
Hi Mel
My understanding is that the revenue will accept 2 ways of claiming expenditure for mileage.
A)Yes, claim back the actual petrol expense and also the cost of the vehicle running expenses(RFL, insurance, repairs) based on the proportion of private to business mileage.
Record the number of business miles in the accounting period and charge 40p per mile for the first 10K miles, 25p per mile thereafter.
I use the second method as my business mileage is small incomparison to private.
I have been told by the revenue that once a method has been selected, this should not be changed without notifying them so it would be worthwhile calculating which will give you the greater charge in the accounts (this reducing profit and hence the tax bill!).
Hope this helps.
Sharon0