40p Mileage

DOTTY

Hi

Sorry if this is a daft question..............but this is my first time doing sole tader accounts and having to put the expense of 40p a mile in..........

I know i don't need a balance sheet for a sole trader but i like to do one, A for practice and B so i now everything balances.

My qeustion is, i debit the P&L with the 40p expense but on the balance sheet where is this credited? i have put it in sundry creditors at the moment?????? not convinced this is right...........

Sorry another question..........we have introduced a seconhand laptop with a value of £120.00. i am going to depreciate it over two years at 50% per year which is fine but for tax purposes this will be disregarded and a capital allowance will be availabe instead.
The capital allowance is 20%, so am i right in thinking, over the period of the laptops useful life we will only be able to claim 40% capital allowances on it?

Thanking you all in advance for any advice
Dotty.

T.C.

Firstly, mileage - has the self-employed person not kept petrol receipts. Not sure how your fuel expense is relevant to the Balance Sheet?
As for the laptop you would use Annual Investment Allowance at the moment, so all of the expense could be claimed.

coojee

DOTTY wrote: »

Hi

Sorry if this is a daft question..............but this is my first time doing sole tader accounts and having to put the expense of 40p a mile in..........

I know i don't need a balance sheet for a sole trader but i like to do one, A for practice and B so i now everything balances.

My qeustion is, i debit the P&L with the 40p expense but on the balance sheet where is this credited? i have put it in sundry creditors at the moment?????? not convinced this is right...........


Dotty.

If they're claiming mileage then somewhere along the line they will have been paid for it. So the entry is DR Mileage and CR Bank or Cash depending on whether they were paid by cheque or cash. If they haven't yet paid themselves for it then you need to set up a creditor for it. As they're a sole trader then they probably haven't paid it they just want to put it through the books, in this case it would have to go as a negative drawing or cash introduced. You need to check that the petrol expenses haven't also gone through the books.

DOTTY

Thank you for your replies

However can i just claify a couple of things.

I thought if i claimed 40p mileage then this would cover everything to do with the van costs, including petrol? We haven't actually paid 40p for anything in particular, so i can't cr cash or bank. If i put the cr to drawings, wont this effect the amount of tax we pay.
I just wanted to put the 40p on the P&L as an expense and then stick the cr somewhere on the BS

Also i did think that i could only introduce the laptop at a fair market value becuase it was secondhand, but if secondhand doesn't matter this is great. I will claim full AIA.

Sorry to keep going on and once again many thanks for any enlightenment!!!!!!!

Dotty

andrewtdk

Crediting the sole traders current account with the value will mean there is more money to draw out of the business however this will not affect tax because sole traders are taxed on their profit and not how much drawings they have taken out.

The 40p does cover all the running costs for the van, i think what coojee was saying was make sure you dont put in the fuel costs etc and the mileage allowance into the accounts as this would be duplicating the expense and your profit would be wrong.

Monsoon

DOTTY wrote: »

Hi

Sorry if this is a daft question..............but this is my first time doing sole tader accounts and having to put the expense of 40p a mile in..........

I know i don't need a balance sheet for a sole trader but i like to do one, A for practice and B so i now everything balances.

Yep, if you're doing it from a TB you will automatically have a BS. As you say it's good practice.

My qeustion is, i debit the P&L with the 40p expense but on the balance sheet where is this credited? i have put it in sundry creditors at the moment?????? not convinced this is right...........

Debit motor expense, credit drawings. This doesn't affect the tax payable (in terms of drawings). Tax is on profit (the Dr expense) not on any balance sheet items like drawings or bank balance.

40p a mile covers all running costs of the car and capital allowances. The only expense you can claim is interest on loan/hire-purchase of it, subject to any private use adjustments.

Sorry another question..........we have introduced a seconhand laptop with a value of £120.00. i am going to depreciate it over two years at 50% per year which is fine but for tax purposes this will be disregarded and a capital allowance will be availabe instead.
The capital allowance is 20%, so am i right in thinking, over the period of the laptops useful life we will only be able to claim 40% capital allowances on it?

You ignore useful life for capital allowances. There have been so many changes I still have to look these up but you could claim it as a short life asset (if these still exist, need to look it up) which would mean you can claim the full cost over its life.

Otherwise, you'd just take WDAs against the main pool and the cost just gets lost in with everything else with WDAs being taken year on year, until the balance on the main pool is under £1000. At that point you can claim the whole lot and clear the pool down to nil in the year (allowance of small balance of unrelieved expenditure).

If you have brought it into the business as second hand it should be brought in at market value on the date it began being used in the business. I don't think you can claim AIA on things brought in (but again, I'd always double check in Tolleys) and I can't remember whether you can claim FYA instead (worth looking if AIA isn't available).



Thanking you all in advance for any advice

Dotty.

You're welcome, sorry I can't remember all the answers off the top of my head! Tolley's Tax guide is about £60 and money well spent, gives all the answers to these type questions in really simple language (even I understand it!)

DOTTY

Thank You

Hi,

Thanking you for all your replies, sorry that i got a littlle confused with drawings.

All your advice has helped greatly. I am also going to invest in some tax literature!!!!!!!

Dotty
xx