Milage and expenses question

John_Clare

Hi all,

I'm a sole trader using his car for both personal and business use.

Some of my clients will pay expenses in full, some pay 14p a mile, some won't pay anything (say if the job is local).

So, for example:

Invoice 1:

Job cost £300
Parking £5
Congestion £10
Milage £10

Total £325

Invoice 2:

Job cost: £300, client pays no expenses.

Total: £300 (however, have had to pay £25 parking, congestion and petrol out of my own pocket).

Invoice 3

Job £300
Travelcard £5.90 which client pays, so

Total £305.90

I keep a record of milage for all jobs. I want to claim 40p per mile for car expenses.

Can I do this, seeing as some clients have already reimbursed me (albeit at their own rate of 14p per mile)?

And what about the other expenses like parking? Can I claim all the expenses regardless if they've been paid back or not, or do I need to work out my expenses as: total expenses - the amounts that have been reimbursed by the client = claimable expenses?

I take it I still add up all the invoice totals, regardless of expenses paid back or not, and that figure is my turnover?

Eg. Invoice 3 - I don't want to be taxed on £305.90, as my actual profit for that job was only actually £300.

So, £5.90 of that is an expense, even though it has been invoiced and paid back? It's still not technically profit is it?

Thanks!

John

fengirl_2

Yes, you can use the flat rate 40p/25p method, but you need to include whatever you have been paid by clients in your total turnover. You need to include parking as a cost as well.
If you include all your travel costs in your expenditure and all your expenses received in your turnover, you wont pay tax on reimbursed expenses.
You should be keeping these records as you go along throughout the year.

zfrl

You need to ensure that you claim your expenses, including milage @ 40p, parking etc on your tax return. What you actually invoice your customers is up to you. Your profit is money received minus expenses.

John_Clare

Thanks so much, I couldn't see the wood for the trees. I've been over-analysing this. I even spoke to two people at the IR and received two different answers.

So the fact that I've invoiced a client for an expense, and been fully or partially reimbursed for my actual costs, doesn't matter. It all balances out automatically.

Seems so easy when explained like this! :-)

John

James_Trimby

HI John you have had good advice here just dont forget that, though parking is okay (and tolls etc) other car costs are including in the 40/25p rate so repairs RFL etc should be ignored.
Also remember to claim your mileage for all business trips, not just the trips to customers. (eg the bank/post office/suppliers etc just make sure that the "main" purpose of the trip is business (ie do it first) if a mixed business/personal trip)