Mileage Help!

kirsttthow

I need some help regarding claiming back for petrol expenses as I've been told different things by different people.

I am currently under the understanding that I should pay for petrol out of my personal account. Then just keep a spreadsheet recording the business miles I have done and how much I can claim back (45p for every mile up to 10,000, then 25p after that) and simply list it as an outgoing (every week/month).

However would I then still have to keep petrol receipts and would that make it more difficult when trying to claim back expenses. If so, if I paid for petrol out of my business account how would I then separate personal miles and business miles?

kirsttthow

I am a sole trader.

So should I pay for petrol out of my personal account. Then keep a business mileage log, and mark it down as an outgoing every week/month?

lazer

kirsttthow wrote: »

I am a sole trader.

So should I pay for petrol out of my personal account. Then keep a business mileage log, and mark it down as an outgoing every week/month?

yes this is one way doing it. (as fuel only covers about 15p a mile out of the 45p - the rest is to cover running costs).

To keep it tidy, i would take drawings from the business account ever month/week to pay yourself the mileage.

As you are claiming the allowable rates by HMRC there is no benefit in kind

Alternatively (assuming this is your first year as sole trader), you can have the car as an asset of the business and claim for the actual cost of the car (Tax, Insurance, MOT, cost etc, and actual petrol expenses)
You must then make a deduction for personal use of car

kirsttthow

I don't get what you mean by take drawings to pay myself the mileage? Just take out the total money for mileage that week/month?

densol_2

If you are a sole trader you really do neex to do more research about permitted expenses. I recommend a book by the "Tax Cafe " that advises on tax tips for small businesses.

You have two choices for mileage :-

1. A simple method of putting down 45p for each business mile travelled. For high business mile users this can work out better

2. The more complex method, all costs regarding vehicle and a capital allowance depending on the CC of the vehicle. You would need to read up about this method ( book above ) or engage an accountant for your whole accounts

kirsttthow

I know the different methods.. I just need to know whether to pay for the petrol out of my personal account and then keep a mileage log and put it as an outgoing every week/month or if there is another way I should do it.