Accounts preparation for someone using mileage rates for motor expenses

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hsodhih
hsodhih Registered Posts: 12 New contributor 🐸
in General accounting discussion
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

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  • burg
    burg Registered, Moderator Posts: 1,441 mod
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    The accounts should be on the mileage rate as well and then do not include the vehicle as an asset and therefore no depreciation.
    Regards,

    Burg
  • hsodhih
    hsodhih Registered Posts: 12 New contributor 🐸
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    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
    burg Registered, Moderator Posts: 1,441 mod
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    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.
    Regards,

    Burg
  • hsodhih
    hsodhih Registered Posts: 12 New contributor 🐸
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    Thank you Ian, very well explained, thanks alot

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