OK, This is probably an extremely dumb question but here goes so thanks in advance.
Limited Company, 1 Director, 1 Financial Year
Bills Client for Mileage @ 0.45ppm monthly
Recieves Cash for said Mileage Claim paid into business bank account
When calculating Corportation Tax to be paid for that year, is the total amount billed to the client and recieved by the company for that year, then classed as an expense and should be removed from profit before working out Corporation Tax for that year?
Or has the claim already been handled by billing the client and the total amount of mileage not to be classed as an expense and should be classed as a profit for the company and is therefore not removed off of the figures before Corporation tax is calculated?
Thanks in advance if that makes sense...
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Depends on whether the company pays the director his own mileage
The amount of mileage billed to the end client is treated as turnover for the year in question.
If the company then reimburses the director for the mileage he has travelled, it is also shown as an expense.
If the amount billed to the client is the same as the amount paid to the director as reimbursement of his travel expenses, then the two net off and there will be no effect on profit - although they should be reported separately as part of turnover and expenses.
(Remember you also need to consider VAT when billing expenses to an end client, if the company is VAT registered - you'd need to add VAT on to the billed mileage).