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Old 11-08-2016, 05:33 AM
Human Human is offline
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Join Date: Sep 2005
Posts: 7
How to enter a mileage allowance claim when using Flat Rate?

Having purchased a new car I've taken the opportunity to switch to using the Flat Rate method which is a lot simpler, and have outlined the key elements of the method as I understand it below. I would value any input regarding errors or omissions in my understanding.

The method involves entering a mileage allowance claim using Write Cheques, and using the but leaves me with one outstanding query. Of course the expense it won’t appear on the bank statement, so If logged in the Current account how do you handle this when reconciling the account? Should I instead put the claim into the Petty Cash account and then just allocate a proportion of my Drawings to Petty Cash (which is what I’ve been doing with vehicle expenses prior to using the Flat Rate method)?

Flat Rate Method:

• Enter all vehicle expenses as Drawings, including;
Vehicle purchases
MOT, vehicle tax, insurance
Maintenance, spares & repairs

• Keep all fuel receipts (request VAT receipts). You need to have receipts with enough VAT to cover the claim.

• Use Write Cheques to enter a ‘mileage allowance claim’ at the end of each quarter.

• Use the Mileage Allowance A & B expense items in QB for the VAT-exclusive and VAT-inclusive portions, see attached screenshot.

Note: VAT code 'B' is just the standard 20%. The transaction shown is a claim is for a business mileage of 900 miles for July-August.
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Old 11-09-2016, 06:16 AM
Rustler Rustler is offline
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Join Date: Feb 2008
Location: Texas - The Republic
Posts: 2,413
I'm not sure how things are handled in the UK, but in the US, mileage is only used when annual income taxes are prepared.

Expenses for the vehicle are entered as the are incurred during the year - this assumes the company pays all expenses during the year.

A trip log is kept in the vehicle that meets our IRS standards to determine business mileage on the vehicle. Since this is a personal car being used, the % of business and personal use is calculated at year end, and using that % for personal use, vehicle expenses are journaled to equity drawing in the amounts that correspond to personal use percentage.

Then on the tax form, business miles from the log, is used to calculate the mileage deduction. AND all vehicle expense accounts are NOT used on the tax form.

The deduction for mileage is not an accounting entry.

Since I do not understand how your VAT works, the above may not be much help
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