Accounts template - mileage

Options
lmiddleham
lmiddleham Registered Posts: 71 Regular contributor ⭐
Hi

I've built up an Excel template for my girlfriend who is setting up as a sole trader.
One one tab I've got a purchases day book which links to a bank account as all expenses are paid for in cash.
However mileage is also included on this tab so any debit in mileage has a credit in the bank account.

Is this correct as the mileage charge is really just a notional charge based on what is allowed for tax purposes?

Also I've got another tab that basically works out cash earned from the business (drawings less capital) but as all her petrol is paid for personally rather than by the business, this may also be not quite right?

Has anyone got any advice on what they do or is the way I'm doing things reasonable?

Comments

  • deanshepherd
    deanshepherd Registered Posts: 1,809 Beyond epic contributor 🧙‍♂️
    Options
    Sounds a little OTT to me.

    I'd use a simple invoice list, cashbook and petty cash book.

    Mileage I'd keep separate but would be fine in petty cash.
  • lmiddleham
    lmiddleham Registered Posts: 71 Regular contributor ⭐
    Options
    Hi Dean

    You're probably right but I wanted to build something automated to test out my Excel skils too!

    Most of the cash received will probably stay in hand rather than be banked so am I OK to Credit Sales, Debit Bank/Petty Cash and for Mileage Debit Mileage Credit Bank/Petty Cash
  • deanshepherd
    deanshepherd Registered Posts: 1,809 Beyond epic contributor 🧙‍♂️
    Options
    That would be fine.
  • lmiddleham
    lmiddleham Registered Posts: 71 Regular contributor ⭐
    Options
    Hi

    Sorry something is still niggling me here.

    In Sole Trader accounts I'm putting through mileage at 40p a mile as this is what's allowed by the taxman.

    However, mileage doesn't actually cost this much.

    Should I put through a different amount for actual costs, and then adjust it when I'm calculating taxable profit or does it not matter.

    Thanks
  • deanshepherd
    deanshepherd Registered Posts: 1,809 Beyond epic contributor 🧙‍♂️
    Options
    The 40p per mile is designed to include all costs (except financing) e.g. depreciation, repairs, insurance, tax and mot as well as petrol. Therefore, for most people, the 40p is not very generous at all.

    You choose which is the best option for your client (business percentage of real costs) or mileage rate. No point doing both until you have made that decision. Once the decision has been made then you cannot change the method for as long as you retain the same vehicle (unless turnover exceeds the VAT threshold at which point mileage rate is not an option).
  • lmiddleham
    lmiddleham Registered Posts: 71 Regular contributor ⭐
    Options
    Didn't think of this way - I was only thinking purely from a fuel point of view.

    Thanks very much, that clarifies it for me.
  • Fingersan
    Fingersan Registered Posts: 84 Regular contributor ⭐
    Options
    Mileage

    I hope I am not too late to replying to this thread but I feel I should make a little note about the topic of mileage.

    There has been a good discussion about what mileage at 40p takes into consideration, but the big question has been missed - should a self employed person claim mileage.... the answer is no.

    Employees can reclaim mileage from there employer but a sole trader must claim for there motoring expenses and then make a private use adjustment. HMRC would not be happy if you were claiming mileage as opposed to the actual motor expenses costs. Please remember to keep all of your fuel and servicing receipts as well.

    Regards.
  • deanshepherd
    deanshepherd Registered Posts: 1,809 Beyond epic contributor 🧙‍♂️
    Options
    Er.. don't think so.

    Have a read here.
  • jilt
    jilt Registered Posts: 2,903 Beyond epic contributor 🧙‍♂️
    Options
    From HMRC's website

    Tax allowances and reliefs if you're self-employed -


    Motoring expenses
    You can deduct the cost of using your car for business purposes. There are two ways of working out how much you can deduct:

    a fixed rate for each mile travelled on business, using our fixed mileage rates
    the actual expenses, worked out using detailed records of business and private mileage to apportion your recorded expenditure
  • jilt
    jilt Registered Posts: 2,903 Beyond epic contributor 🧙‍♂️
    Options
    Dean you beat me to it!
  • PGM
    PGM Registered Posts: 1,954 Beyond epic contributor 🧙‍♂️
    Options
    Fingersan wrote: »
    There has been a good discussion about what mileage at 40p takes into consideration, but the big question has been missed - should a self employed person claim mileage.... the answer is no.

    I think you're thinking of company cars?
  • Monsoon
    Monsoon Registered Posts: 4,071 Beyond epic contributor 🧙‍♂️
    Options
    Quite often 40p a mile will be more tax efficient for sole traders but it all depends on the vehicle and the usage.

    50/50 private/business use - 40p might be better
    95% business on a car that's expensive to run and reasonably new - apportionment may be better

    Keep a mileage log - you need it for either method. If the client can be bothered to keep all the petrol, maintenance etc receipts then you can run a comparison in the first year to see which is better and extrapolate it forwards to check it will still be the best solution. Some clients won't be bothered to keep all receipts and are therefore happy with 40p a mile - it's hard enough getting them to do mileage logs!

    In our experience, 40p a mile usually comes out on top.

    Also to add, you can't switch between the two - once you decide on a method you have to use it until you change your car. If your turnover is more than 68k you aren't allowed the 40p concession.

    Don't forget the 20p a mile allowed for bicycles and 5p a mile for passengers carried :)
  • andrewtdk
    andrewtdk Registered Posts: 150 Dedicated contributor 🦉
    Options
    I dont want to hijack the thread but i keep seeing people saying that vat registered sole traders cant claim the mileage allowance? I hadn't heard this before and wondered why this is. I've tryed looking on google but cant seem to find anything about it.

    Also HMRC give an amount of vat on the 40ppm that can be reclaimed so seeing as vat registered sole traders cant claim the mileage allowance is this just for vat registered ltd companies?

    Cheers
  • deanshepherd
    deanshepherd Registered Posts: 1,809 Beyond epic contributor 🧙‍♂️
    Options
    It's not VAT registered traders that cannot use it - it is the VAT threshold that determinses whether self-employed people can use it as an alternative to recording actual costs.

    Reason being that they only want to give the concession to the smallest of businesses.
  • lmiddleham
    lmiddleham Registered Posts: 71 Regular contributor ⭐
    Options
    Monsoon wrote: »
    Keep a mileage log - you need it for either method. If the client can be bothered to keep all the petrol, maintenance etc receipts then you can run a comparison in the first year to see which is better and extrapolate it forwards to check it will still be the best solution. Some clients won't be bothered to keep all receipts and are therefore happy with 40p a mile - it's hard enough getting them to do mileage logs!

    Don't forget the 20p a mile allowed for bicycles and 5p a mile for passengers carried :)

    The client in case lives with me so I make sure she keeps a mileage log! She's happy enough with this rather than keeping receipts for everything! Also I don't think she has any of the records from when she purchased her car anyway.
    Also - is that a serious comment that you can claim extra for giving a passenger a business lift on your bike?!
  • Rinske
    Rinske Registered Posts: 2,453 Beyond epic contributor 🧙‍♂️
    Options
    I think the extra claim for a passenger is in a car, but would be more fun on a bike!
  • Poodle
    Poodle Registered Posts: 711 Epic contributor 🐘
    Options
    Once the decision has been made then you cannot change the method for as long as you retain the same vehicle (unless turnover exceeds the VAT threshold at which point mileage rate is not an option).

    If you are using the mileage rate method and have to register for VAT due to your turnover increasing then you continue using the mileage method until the vehicle is changed. You then change to the actual cost method.

    Any one know how the mileage rules apply where a business with a smaller turnover registers voluntarily?
  • deanshepherd
    deanshepherd Registered Posts: 1,809 Beyond epic contributor 🧙‍♂️
    Options
    Poodle wrote: »
    Any one know how the mileage rules apply where a business with a smaller turnover registers voluntarily?

    Doesn't matter. The concession only refers to the turnover threshold for VAT purposes, not whether a business is actually VAT registered or not.

    Similarly a business making exempt (or outside the scope) supplies still has the same £68k limit for mileage allowance purposes even if they will never be registered for VAT.
  • columbia
    columbia Registered Posts: 580 Epic contributor 🐘
    Options
    Sorry to jump into this thread.

    I have set myself up as a Ltd Co and I am supposed to be based at home, however I travel to one company 3 times a week and another company once a week, whilst staying at home and working for other companies one day a week.

    As I am travelling to the same companies each week can I claim 40p a mile, or do I need to submit fuel receipts???
Privacy Policy