Question asked by Adrian Sadler 9 years ago

As a self empoyed person - when i spend money an petrol and claim it back through the 45p a mile do i.......

Put the £40 through as an expence first with a copy of the reciept? Or purely put it through as a mileage expence?


8 Replies

Hi Adrian,

You can claim it back by creating it as an expense on the Purchases>Expenses>Create mileage menu.

This whole thing confuses me.
How do you account for thr £40 coming out in the first place? or dont you have to?

Hi Adrian, if you obtain tax relief for your vehicle costs by claiming 45p a mile from your business then no other vehicle costs (e.g. fuel, servicing, tyres etc) can be entered as a business expense. The 45p is meant to be enough to cover all motoring costs, including fuel. The actual fuel receipts and servicing/repair bills are personal expenditure, reimbursed to you from your business at the rate of 45p per mile (25p after 10,000 miles in a tax year). If you are a sole trader there is an alternative to claiming a mileage rate, you can enter all motoring costs as a business expense and then make an adjustment for private use in your tax return. Hope that helps.

Yes I am a sole trader but for ease I would like to use the 45p a mile route.
So if I buy £40 of fuel then I do not log this as an expense?
But instead Use the create mileage route? This will in itself reduce the profit in the business? therefore less tax aka tax relief?

That's pretty much it Adrian. When you claim the 45p you should buy your fuel out of your personal bank account not your business account and leave it out of ClearBooks. You can then enter each business trip in ClearBooks using the mileage tool, and once a month (or weekly if you prefer, up to you) approve all the trips to create a single expense claim which appears in CB as an invoice payable to yourself. Pay that, like you would any other supplier's invoice, by transferring the amount from your business to your personal bank account. As you say, the 45p is simple to claim, and it also avoids any argy-bargy with HMRC over the validity of deductions for personal use. By claiming each business trip in CB you have a pretty bullet-proof record to support the deduction from taxable profits.

Just one other thing to note, if you're VAT registered you still need to keep some fuel receipts to support your claim for recovery of some VAT on the 45p paid to you. You just file the receipts though, don't enter them in CLearBooks. If not VAT registered you can just forget all that, no need to keep any invoices/bills for motoring costs if you claim the 45p.

Thank you very much for that answer. Its all now makes perfect Sense.

When you pay yourself would you pay that into the drawings account? or leave it as a supplier (me) payment?

Sorry for the questions

Just leave it as a supplier payment. As it is a payment for a business expense it's not part of your drawings, different things altogether. Drawings are you withdrawing profit from the business, expenses are payment for a business purchase.

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