Thanks for the advice. I had considered that and having received your reply, that's pretty much what I've ended up doing. The mileage claims are now split into 2 line items, 1 @ 32p/mile no VAT and 1 @ 13p/mile with VAT. Thanks again for the assistance.

I've just posted a similar question under a UK sub-topic.  QB already includes a Mileage Allowance expense account, with sub-accounts for the VAT-inclusive and VAT-exclusive components.  I'm self-employed. sole trader, and am starting to use the Flat Rate method (mileage allowance) to claim for vehicle expenses (mine, not an employee's).  I was going to use 'Write Cheques' to enter the mileage allowance claim, but this woul require entering the expense in the Petty Cash bank account rather than Current, because using the Current account would create a problem when it comes to reconciling the account (as the expense won't appear on the bank statement).  I expect there's a better way and wondered if you could point me in the right direction.

I operate as a LTD so I suspect the use of QB is different if you're a sole trader. As it's my own car, you can't claim (as far as I'm aware) for anything else so the two sub-accounts for included and excluded mileage payments seems to work fine,

Thanks for responding. You can't claim for anything else as a sole trader either.  The mileage allowance covers all vehicle expenses.  My question is how you log the mileage claim in QB.
I've just set up a LTD company as well, as it happens, and so whether the method you use is relevant to a sole trader business or not, it still will be for my LTD company.

You can also set up two new tax codes and a new group to apply them.one tax code is posting to vat control for reclaim the other is posting to expense account. The tax is applied via the new group

Graceman - Thanks for your suggestion.  Presumably you're referring to creating a new group in Items & Services, as there doesn't seem to be a way to do that for expense accounts.  I'm treating the mileage allowance as an expense - not sure how I would use a group item to record it.

My accountant has advised me to enter the allowance as a cash payment, which is what I had in mind to do originally.

@glennc - did you get anywhere with this? As far as I can tell, the only 'correct' way to do this is to enter 2x expense lines as :-

 

1. Mileage rate (non-fuel portion)

2. Mileage rate (fuel portion)

 

And then apply vat at 20% to '2.' and no vat to '1.'

 

The article here seems to explain : https://www.millwardmay.co.uk/quickbooks-vat-on-mileage

 

Unless it's possible to alter the vat rate on expenses, do you know? Quickbooks doesn't seem to have an inbuilt solution to this, does it?

Thanks for joining this thread,  @Domalos 

I appreciate sharing to us the alternative steps on how to reclaim the VAT for mileage. This information will surely help other users in the same situation.

QuickBooks doesn’t have a built-in feature to automatically adjust the tax at this time. Another way to do this is to override the amount on the expense.

Let me guide you on how to perform these steps. 

 

1. Click on the Plus icon in the upper right, then choose Expense.
2. Enter the name by clicking on the Payee drop-down.
3. Input the correct date and payment method.
4. Click on the drop-down for Amounts are, and select Exclusive of Tax.
5. Under the Category column, select mileage.
6. Enter the amount, then select 20% for VAT.
7. Go to the VAT @20% section, input the correct amount in the field box.
8. Click on Save and close.

This should get you pointed in the right direction. Keep me posted how these steps work for you. I’ll jump right back in to help.

 

Hi,

 

To be fair I didn't investigate any further. When I submit my mileage expenses for the month, I just split it into 2 lines, VAT recoverable and not. I've got two expense types set up in Travel & Accomodation and then I just allocate the appropriate amount to each type, see file attachment.

Shame it's not simpler but it's hardly a bind. I was advised to comment the mileage and amount in each transaction just for traceability. BTW the HMRC allowances change periodically, you can find the current allowances here:

https://www.gov.uk/government/publications/advisory-fuel-rates

 

 

Have been scratching my head with this issue today.

I have tried the two line solution which is fine. Not sure how things were in QB in 2019 but you can log the mileage in the Mileage section so that would cover the normal mileage expense but not the VAT portion of the mileage. However if you create another line in expenses aren't you creating another expense and falsely submitting two expenses. 

I have tried doing the second line but then  "minused" the net value of the expense and put No VAT at the end. This way only the VAT portion counts and not the net expense.