Sole Trader - Apportioned 'Use of home' & car expenses

As I Sole Trader I have set up a separate Business account to make accounting easier.

I need to understand the correct way to account for Apportioned ‘Use of home’ & car expenses.

20% of my electric, gas, home insurance etc. expenses are apportioned to my Business.
Car expenses are also apportioned depending upon the amount of business mileage used, but I obviously do not know the percentage used until the end of the year.

All these are paid out of my personal bank account. Therefore I wish to import these transactions using the Import Statement tool. I can then delete the transactions I do not want and I suppose I would then need to manually adjust the amounts to 20% etc…

  • Is this the correct way to do this?
  • Would I import these transactions into the Proprietor Drawings Account or create another, if so what type of account would it be?
  • I would prefer not to have to create Invoices/Purchases for these transactions if that is possible.
  • How do you account for these expenses. Do I show them as coming out of the Proprietor Drawings Account and into the relevant nominal accounts?

Regards
Paul

You can do it that way, or you can simply raise a purchase invoice and allocate the costs to outgoing type ‘Use of Home As Office’ and pay the invoice from the ‘Proprietors Drawings Account’.

If you are going to import the transactions, it would be best to set up a new back account on Quick File for your personal account, tag all business related expenses and delete any personal transactions, that way if you HMRC carry out a compliance check, you will have a clear audit trail of which bank account the transactions were paid from.

Yes, although you would then need to journal out the personal use element (80% using your example), therefore it would be better to tag/raise a new purchase invoice, you can then ‘Modify’ the invoice and add a discount line for the personal use element.

Tag/raise a purchase invoice and allocate the costs to outgoing type ‘Use of Home As Office’, pay the invoice from the ‘Proprietors Drawings Account’ if not uploading statements and tagging.

Please refer to HMRC’s guide for further help on what you can claim and examples:

Help:

Examples:

http://www.hmrc.gov.uk/manuals/bimman

Hi Paul,
I may be missing something here but if you organise your bank statement in csv ready to upload into bank you could then make sure the description has a suitable tagging to “home use expense”. Your bank could easily be headed up Personal Cash and therefore you would know how much you have put personally into the company. - Donna

Thank you both.

I used the following method in the end, which seemed to be the most efficient method.

I downloaded my personal bank transactions to a separate CSV file, removed unwanted transactions, deducted 80% then imported the amended values directly into the Proprietor Drawings Account. I then Bulk Tagged them as necessary to “home use expense” etc.
This negated the need to journal out the personal use element. The advantage of this method is that I can also easily account for car expenses at the end of the year once I know the % used for business mileage. I did not really see the need to create a separate Bank Account and did not want to create Purchase Orders for these.

Note quite sure how I am going to tie up the Petrol Receipts, perhaps I should create 1 PO to cover all Petrol receipts or have 1 PO per receipt. I need to think on this a bit more.

Paul

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Like this idea and have in fact just asked the girls to use this idea myself to split bank receipts to more than one nominal.
Great -