Benefit to claiming expenses?

[robz8701]

The issue is the majority of accountants speak in accountancy terms and assume you to understand. If you understood it all then would there be any need for an accountant?

So to re-iterate and use an example,

For April 15 (new tax year) I will drive 2154 miles for work for which I pay for myself. My business expense claim will be £969.30. In May do I simply setup a bank transfer to my personal account for the expense amount and ensure this is tagged as this expense for accountancy purposes?

[Kenny@MyAccountantFriend]

You should record you miles as incurred as an expense of the company and you can then reclaim the funds owed to you at any time.

Say for example you drive 100 miles per week, you would claim £45.00 as an expense of the company each week.

You could then claim your expenses either weekly, monthly or ad hock from your Ltd Company.

Say for example you then claimed 4 weekly from your company, you would pay yourself the £180 (£45 x 4) from the company bank to your personal bank and offset this against the mileage incurred and claimed as a cash expense within your accounting software.

Net result in the cash expenses would be nil as what was incurred has been paid, while your company will show a mileage claim of £180 and you personally will have £180 to offset against the actual costs incurred personally for petrol and ware and tare of your vehicle.

[robz8701]

So for simplicity the scenario I stated is valid? Appreciate the terminology but I want to clarify on what is valid and correct in regards to actual monies.

"For April 15 (new tax year) I will drive 2154 miles for work for which I pay for myself. My business expense claim will be £969.30. In May do I simply setup a bank transfer to my personal account for the expense amount and ensure this is tagged as this expense for accountancy purposes?"

[Kenny@MyAccountantFriend]

Yes you are correct.

[SpontaneousOrder]

You have an accountant to do your accounts - but if you're runnign your own business you surely need to have a basic understanding of how the basics work. Those accounts are your responsibility - legally speaking - regardless of whether you have an accountant.

Didn't you wonder why you were recording business mileage in the first place?

[mudskipper]

So for simplicity the scenario I stated is valid? Appreciate the terminology but I want to clarify on what is valid and correct in regards to actual monies.

"For April 15 (new tax year) I will drive 2154 miles for work for which I pay for myself. My business expense claim will be £969.30. In May do I simply setup a bank transfer to my personal account for the expense amount and ensure this is tagged as this expense for accountancy purposes?"

No, you claim after you've incurred the expense, not before. So claiming all 2015/16 mileage in May '15 (if that's what you meant) is a no-no.

[Andrew@Wisteria]

So for simplicity the scenario I stated is valid? Appreciate the terminology but I want to clarify on what is valid and correct in regards to actual monies.

"For April 15 (new tax year) I will drive 2154 miles for work for which I pay for myself. My business expense claim will be £969.30. In May do I simply setup a bank transfer to my personal account for the expense amount and ensure this is tagged as this expense for accountancy purposes?"

Keep a log of all expenses paid personally on behalf of the company as you go along. Then repay yourself at convenient/sensible intervals from the company bank account, rather than say each time you do a 10 mile trip.

[blacjac]

No, you claim after you've incurred the expense, not before. So claiming all 2015/16 mileage in May '15 (if that's what you meant) is a no-no.

I think he means "for the month of April 15 (in the new tax year)"



However OP, if you are claiming in excess of 2000 miles per month, be aware that the 45p per mile is only tax free for the first 10,000 miles in the tax year

[northernladuk]

WTF!?!? My previous accountant never explained this to me. It was simply a case of stating this as an expense but I never did anything in regards to actual monies!

Wow... Just wow lol....

That's because he does your accounts. It's up to you to run your business properly. That involves you having even the basic understanding of how to do so and you carrying out the basic admin of your company.

I don't think they assume you know accountancy speak but they do assume you have a grasp on your own business. Not sure if you realise but you are ultimately responsible for your accounts because you sign them off. Unless the accountant is negligent then all this falls on your head, it's your business after all. Feigning ignorance or being too lazy to bother is not an excuse.

There is the umbrella option if it's all a bit much.

[ASB]

If you are incurring business related expenses you would be better to pay these through the company thus saving Corporation Tax at 20% of the amount spend than paying the expenses personally where you may have had to draw a dividend to fund the purchase and therefore potentially paying personal tax on the dividends drawn if a higher rate tax payer.

Corporation Tax (CT) and dividends are linked to each other as CT is payable at 20% on the company profits and the remaining 80% is what can be drawn as a dividend from the company.

If incurring expenses it would always be better to claim for them via the company than pay for them personally.

I think there is a circumstance where it may possibly be better to claim then on satr rather than from the company.

if you happen to be a higher rate taxpayer from other income then claiming them through satr would give relief of 40%. Putting them through the company would only give ct relief of 20%.

But it would only be effective if not withdrawing it all through dividends.

not a normal situation of course.