Accounts preparation for someone using mileage rates for motor expenses

hsodhih

Hi,

I needed to establish that if a self employed person is claiming motor expenses based on mileage rates, how do we draft his accounts (P+L and balance sheet)

Do we do his P+L and balance sheet as per actual spending and claim depreciation as an expense on P+L

But when we file the Tax Return, we exclude the actual spend and include the expense for motor expenses based on the miles rate?

Thanks

burg

The accounts should be on the mileage rate as well and then do not include the vehicle as an asset and therefore no depreciation.

hsodhih

But what about balance sheet i.e. cash or bank account, how will that tally up?
As out of bank lets say £5500 has gone out as motor expenditure, but if we are showing £6000 as motor expenses as per mileage rates, how do we account for the difference of £500.

Thanks

burg

The £5,500 needs to go to drawings as technically this is private.
Then bring in the mileage basis either by reducing drawings or putting as capital introduced.

hsodhih

Thank you Ian, very well explained, thanks alot