Milage expense calculation

[wa-design]

Hi everyone! Very noob question here but I'm very confused about a milage expense.

I have recently gone freelance and had to drive to a job this whole week. The milage worked out to 292.8 miles total which as far as I know I can claim as an expense from my business account (I've setup a separate account so I'm not mixing money).

I had to fill my tank up with about £50 of petrol from my personal account, but the milage to get there and back only actually works out to £40.98 (sourced from the AA milage calculator).

I use Xero to handle my accounts, and now have no idea how much to add as an expense. After a bit of research online I've seen I should be working it out as 292.8 x 45p (taking this from gov.uk).

That then works out to £131.76. But that is way more than what I actually paid for the petrol...? Hence why I'm scratching my head now.

So my question(s) is/are; how much should I reimburse my personal account from my business, am I actually calculating this correctly?

Any help would be much appreciated!

[bd6759]

Work out the cost using 45p per mile. Deduct this as an expense when you prepare your business accounts.

[jerome.lane]

45p per mile is allowed as this also covers vehicle expenditure such as road tax, insurance and wear and tear etc.

[wa-design]

Thank for getting back to me on this!

Little unsure of the answer to my question though

How much should I reimburse myself for the petrol as I didn't use £50 worth?

[robbob]

After a bit of research online I've seen I should be working it out as 292.8 x 45p (taking this from gov.uk).
That then works out to £131.76.

How much should I reimburse myself for the petrol as I didn't use £50 worth?

you reimburse yourself 131.76 being the full mileage due - with there being no reimbursement for petrol as the 131.76 covers "all your motoring costs"

Note on xero or any other package you always need to be careful not to double enter any expenses like this.
If you have entered the expense due on the xero system separately then ensure when repay yourself you pay down either the bill due or ensure the payment/transfer goes to the relevant nominal that was used to include the expense in the first place. eg if you have a "paid privately bank account" and have entered mileage due as payment via that "paid privately bank account" your payment from the business back to you would be posted as bank transfer to the

[bd6759]

You don't need to reimburse yourself anything. On the other hand, you can draw out as much business profits as you wish. They are your profits and you will be taxed on them whether you draw them or not.

You do not count the petrol or any other motor expenses as "expenses" in your profit and loss account. You only put in the total amount calculated using 45p/25p rate. This reduces your taxable profit. This is the amount to pay tax on.

[Concious_Entrepreneur]

Hello everyone,

I would like to join to this exact discussion. I am a rookie in this subject, so bear with me, please.
As a sole trader with expertise in the creative industry, also I had some business meeting in the past which required me to use my car. Based on current responses, should I perceive 45/25p rule as sort of self-employed allowance given by the government to reduce my overall annual motoring costs? Furthermore, the best practice is to collect all fuel receipts and then at the end of the tax year sum up everything, apply 45/25p rule, and finally deduct from my taxable profit, right?

How can I prove that this car was used for a business, not private journeys? Paying for fuel expenses from the business account will be enough? Is a car insurance policy could be helpful too? I am asking because my car insurance company asked me how many miles I am going to do during the year only for business purposes.

Do you know other good practices to record all business milage, especially, if you are just a sole trader and sometimes you are using this car for private use?

Thank you very much for your time and consideration.

Have a great day.

Peter.