Share this content

Partnership personal motor expense

Help needed re motor expense claims

Didn't find your answer?

I have just gone into a cleaning business partnership with a friend and am slightly confused with how I deal with personal motor expenses. I am the driver and have been racking up mileage in my personal vehicle. I am aware of the HMRC flat rate which is what we will use however I am unsure of two things.

1. How do I account for the expenses and claim back the mileage? (I also do the books so need guidance on this) 

2. As I am not being reimbursed how do we make it so that I alone am benefitting from the mileage allowance?

hope this all makes sense

thanks 

Replies (7)

Please login or register to join the discussion.

avatar
By SXGuy
03rd May 2021 12:40

Bit confused if I'm honest.

You either claim mileage allowance or fuel costs, you can't claim both, so how you account for the expense depends on what you claim.

How do you benefit without being reimbursed? It lowers your tax bill. Net affect is, you benefit from higher profits at lower tax

Perhaps your not asking the questions in the right way but my answers are based on how I interpretate them.

Thanks (0)
Replying to SXGuy:
avatar
By Cbookkeeping
03rd May 2021 12:45

I am not claiming fuel costs as it is my own car so thought it would be easier to do flat rate.
Therefore my question is still the same how do I account for this within the books?
And the other part is how do I personally benefit if the tax bill is reduced for the partnership meaning my partner also benefits from it which is unfair.
Thanks

Thanks (0)
Replying to Cbookkeeping:
avatar
By frankfx
03rd May 2021 17:02

Cbookkeeping wrote:

I am not claiming fuel costs as it is my own car so thought it would be easier to do flat rate.
Therefore my question is still the same how do I account for this within the books?
And the other part is how do I personally benefit if the tax bill is reduced for the partnership meaning my partner also benefits from it which is unfair.
Thanks

'And the other part is how do I personally benefit if the tax bill is reduced for the partnership meaning my partner also benefits from it ...

which is unfair."

Seek professional advice, to ensure fairness in all things tax.

The partnership does not have a tax bill, I am being obtuse here..

..deliberately so as there are many things that can go adrift in a partnership.

Joint and several liability, for instance.

Beyond tax, an accountant can help the partnership in many ways.

Getting the motor expense claims " right" is an indication that there are many other things to address.

Thanks (0)
Replying to Cbookkeeping:
RLI
By lionofludesch
03rd May 2021 17:18

Cbookkeeping wrote:

And the other part is how do I personally benefit if the tax bill is reduced for the partnership meaning my partner also benefits from it which is unfair.
Thanks

Never mind the tax - your partner is benefiting from all the money you're paying for travelling to which he is not contributing a penny.

If you want tax relief, the expense has to be in cluded on the partnership return.

HMRC don't insist on you splitting profits equally (though your partnership agreement might).

Thanks (0)
avatar
By sarahg
03rd May 2021 12:50

Firstly, appoint an accountant, they will be able to help with the basics of how a partnership works

Re motor expenses, enter the mileage claim in the books as an expense and make a payment from the business account to your personal account to reimburse yourself for the expense

Then you split the remaining profit at the end of the year as per your partnership agreement

Thanks (3)
Replying to sarahg:
avatar
By Paul Crowley
03rd May 2021 15:07

Says it all

Thanks (0)
Replying to Paul Crowley:
avatar
By nick farrow
04th May 2021 17:43

i agree with sarahg - it is that simple provided both partners allow a mileage claim - i think it gets tricky when the partnership does not allow certain tax deductible expenses to be claimed

Thanks (0)
Share this content