Forum

topBanner
First Previous - Page 1 of 1 - Next Last

Limited Company - Director Mileage & Use of Home Office Expenses

Jo G
  • Fellow PM.Dip
  • Practice Licence
  • 186 posts
  • # 84020

Hi guys,

Looking for a bit of a sanity check please.

If a director of a limited company claims business mileage for use of his personal car at the standard rate of 45p per mile (less than 10,000 miles), would I record it in the books as DR Motor Expenses, CR Director's Account/Loan Accoount?

If an employee submitted a mileage claim, would it simply be DR Motor Expenses, CR Petty Cash (which is where the payment was made from)? 

The same with use of home office using the standard allowable HMRC fixed rate, DR Use of Home Office, CR Director's Account/Loan Account?     

Are there any implcations on VAT if they are VAT registered?

Thanks in advance,
Jo        
  • 794 posts
  • # 84027

Hi Jo,

Firstly, how is the director receiving payment for his mileage? I would physically pay it through his wages providing I received the record of mileage done etc. If he is not actually taking the payment then I suppose could record it through loan account. Vat is reclaimable on mileage paid but not on the full 45p - HMRC website explains this in more detail as it depends on type of vehicle.
Employees being paid mileage at the HMRC rate would be processed as you state.
Ref the home office fixed rate - I would not put this through the accounts as this would be claimed on his personal Tax Return. I may be corrected on this by others!

  • A clever person solves a problem.

    A wise person avoids it.

    Albert Enstein


  • Quote
Jo G
  • Fellow PM.Dip
  • Practice Licence
  • 186 posts
  • # 84029

Thanks for your input Marilyn, would be interested to hear others views on this also please, his books from last year show that his accountant used a "use of home as office" account.

Jo
Stevie Boy
  • 20 posts
  • # 84039

Jo Gsaid:

“Hi guys,

Looking for a bit of a sanity check please.

If a director of a limited company claims business mileage for use of his personal car at the standard rate of 45p per mile (less than 10,000 miles), would I record it in the books as DR Motor Expenses, CR Director's Account/Loan Accoount?

If an employee submitted a mileage claim, would it simply be DR Motor Expenses, CR Petty Cash (which is where the payment was made from)? 

The same with use of home office using the standard allowable HMRC fixed rate, DR Use of Home Office, CR Director's Account/Loan Account?     

Are there any implcations on VAT if they are VAT registered?

Thanks in advance,
Jo        ”

Hi Jo,

Yes, the £45p is a payment or an intended payment/obligation for which you need to create a creditors account (directors loan).

I will be a little pedantic in regard to the Petty cash, petty cash usually being an imprest system (Is that the case here?) should be Dr Expenses and Cr cash, i.e. you consume the petty cash, and then reimburse it, the act of reimbursing is to debit to all the types of expenditure and take more cash from bank to fill back up petty cash to its agreed level (which should be recorded as an asset on the balance sheet).

Just to add to the response from Marilyn, you can reclaim VAT on the fuel element of the mileage rate i.e. the £0.45p is not intended solely to reimburse for fuel, but also for the other costs of providing your own vehicle. Use published fuel elements from the AA and RAC.   Also to satisfy the tax inspector you must have valid VAT receipts in support of the VAT input claims.

Directors of limited companies being employees cannot claim for anything but incremental costs incurred when working from home, there is some regulation for making a claim search for EIM01472 on HMRC website.  Alternatively the employee can make a rental agreement with the company, then the employee must declaire this property income on the annual self assessment, be sure to advise about the capital gains pitfalls.

Cheers
Steve






Edited at 17 Jul 2012 10:16 AM GMT

Edited at 17 Jul 2012 10:17 AM GMT
First Previous - Page 1 of 1 - Next Last
bottomBanner
loading