Mix of business miles that are charged to client as expenses and others that are not

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1

Hello and thanks in advance for help. This is my situation: I’m a sole trader. I have a business bank account that’s linked to my Quickfile account.

Some of the business miles that I do are charged to the client as expenses (at 45p per mile), so I add this to their invoices and they pay me alongside their payment for the work that I’ve done for them, into the business bank account.

Other business miles that I do are not charged to the client.

How do I deal with this, making sure that my overall profit/loss is correct and I don’t end up paying tax on the expenses that have been paid by the client.

Many thanks

2

Hello @Effie

You may find this article useful:
Business mileage expense

3

Thanks Steve, I can see that this will help in the mileage that I am not claiming back from my clients, but how do I deal with the mileage that is paid by clients as expenses?

4

Thanks Steve, I can see that this will help in the mileage that I am not claiming back from my clients, but how do I deal with the mileage that is paid by clients as expenses?

5

Hello @Effie

You would record a purchase invoice for this to reduce the profit.

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6

You’re over-thinking it. There’s no difference between mileage you charge out to the clients and mileage you don’t - you record a 45p/25p per mile expense at the HMRC rates for all the business miles you travel, whether charged out to clients or not.

Separately from that, you invoice your clients for the mileage you’re charging to them, at whatever rate you’ve agreed with each client (plus VAT, if you’re VAT registered).

If you’re charging your clients at 45p per mile (and doing less than 10k miles in the year) then the two sides will net off exactly, where the income from the recharged mileage exactly offsets the nominal expense you “incur” on your P&L.

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7

Thank you Ian. The total business mileage (charged to clients and not charged to clients) will be over 10k miles per year…what do I do then?

8

The HMRC rate you can claim as a notional expense is 45p per mile for the first 10k miles, then 25p per mile for anything beyond that. You need to track when you hit that 10k threshold (when your total amount claimed for mileage so far this year reaches £4,500) and switch to the lower rate until the next year end.