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Post Info TOPIC: Bookkeeping for mileage


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Bookkeeping for mileage


Ok, I'm struggling here. Could anyone tell me the correct way to do the bookkeeping for mileage allowance paid to a director or employee of a Limited VAT registered company?

I have a client who used to send his list of mileage to the previous bookkeeper and she would add it on as a motor expense and he would physically pay himself from the bank.

Dr. motor expenses, Cr. bank.

Nothing went through payroll and no VAT was reclaimed.

Am I right in thinking that both these need to happen??

What is the procedure for this, is it - notify his payroll service to inform them he uses X many miles per month and then receive payment through his salary?

What is the bookkeeping element that I need to do in regards to the VAT? Surely I can't add VAT onto payroll journals.. and if I continued with the motor expense as previously done then aren't I doubling up?

A final question - he is on Sage and I have noted a Scale charge icon on the VAT return tab, should I use this rather than putting it all through payroll and bookkeeping??

I'm ever so confused and would appreciate a 'dummies guide' if anyone has a moment to spare!

Thank you.


Master Book-keeper

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Posts: 6666

Into reqd before we start. We always ask newbies!

Usual stuff - what prof body do you belong to, do you work for yourself or in a practice/ firm, are you a bookkeeper or accountant, what qualifications, how long in role, where up to in your studies-what exams passed/with what body/in midst of doing, where based, what you did before this role? That sort of thing. Helps get to know you but also how best to pitch answers.

Please add your first name, rather than just initials so that appears on your posts each time (profile, signature)

Is it a Director or an employee?

Is the director also a participator?

What type and version of sage?

Does the list show a full breakdown of where he has travelled? Is there any commute mileage? (Care)

What is the mileage rate being paid?

Daft question, but I have to ask as folk get confused, is this definately a Limited company, or sole trader?

What other vehicle expenses are being put through?

Do you have fuel receipts as well?


Joanne McCormick

Fallows Hall Ltd

Winner - Bookkeeper of the Year 2015, 2016 and 2017

Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.

Forum Moderator & Expert

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And why did the client change bookkeepers?



Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.

Senior Member

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Posts: 220

Also how many miles per year is he claiming as there are two rates.



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