More Sage pain
Discussion
Eric Mc said:
If you haven't paid yourself from the company yet, are you making maximum use of your 2006/07 Personal Tax allowances, expense claims etc etc etc?
The annual lower earnings limit before NI is payable on salaries is £5,200 for 2007/08.
As a director, you can pay yourself up to this amount in a series of lump sum payments without worrying about paying over any NI. Obviously, once exceeded, any further payments of salary above £5,200 will result in an Employee's NI AND and Employer's NI amount being payable.
From a dividends point of view, you need to be sure that the company has sufficient rserves available to enable dividends to be lawfully paid to the shareholders.
Also, make sure that full account of Expenses paid out of Pocket by the directors (i.e yourself) are properly accounted for as this allows you to repay yourself from the company, tax and NI free - provided all the expenses incurred were "Wholly and Exclusively for the purpsoe of the trade" and the necessary details are shown in the P11d when appropriate.
The annual lower earnings limit before NI is payable on salaries is £5,200 for 2007/08.
As a director, you can pay yourself up to this amount in a series of lump sum payments without worrying about paying over any NI. Obviously, once exceeded, any further payments of salary above £5,200 will result in an Employee's NI AND and Employer's NI amount being payable.
From a dividends point of view, you need to be sure that the company has sufficient rserves available to enable dividends to be lawfully paid to the shareholders.
Also, make sure that full account of Expenses paid out of Pocket by the directors (i.e yourself) are properly accounted for as this allows you to repay yourself from the company, tax and NI free - provided all the expenses incurred were "Wholly and Exclusively for the purpsoe of the trade" and the necessary details are shown in the P11d when appropriate.
Edited by Eric Mc on Tuesday 1st May 14:06
I believe I'm making full use, I was reasonably well paid before I started up the business. I've paid myself tax and NI free where I've incurred expenses (thanks to your wonderful advice on other threads) so I'm not out of pocket in that respect. My salary will be bang on the monthly upper earnings limit and then anything else will be dividends. Reserves aren't an issue as I'm the sole shareholder currently.
So in Sage it's a payment (7001, directors salaries) with a code of T0?
If I did write a book about Sage it would probably be titled "Sage and the joys of the big red deleted tran".Me again 
It's time to claim my fuel back.... So how do I go about it in Sage and make sure I get the VAT back too?
I know how many miles I've done which I'll be paying myself 40p per mile for and I have VAT receipts since I started the business so what's next?
I don't want the nasty VAT man getting a penny more than he is entitled to
It's time to claim my fuel back.... So how do I go about it in Sage and make sure I get the VAT back too?
I know how many miles I've done which I'll be paying myself 40p per mile for and I have VAT receipts since I started the business so what's next?
I don't want the nasty VAT man getting a penny more than he is entitled to
Completely normal as far as I know.... They want their quarterly cut of the shirt off my back again this month 
I may have cocked up a little, this is the first time I've paid myself fuel so the VAT I'm claiming back goes back to December whereas the VAT return will be for March April and May. Have I goofed?
I may have cocked up a little, this is the first time I've paid myself fuel so the VAT I'm claiming back goes back to December whereas the VAT return will be for March April and May. Have I goofed?
The correct adjustment would be as follows:
Debit - Motoring Costs with the VAT EXCLUSIVE value of the Mileage claim
Debit - the Tax Payable Account with the Input Vat you intend to reclaim
Credit - Director's Loan Account/Director's Current Account (or Drawings if a sole trader or Partner) with the VAT INCLUSIVE total
Run Off your VAT quarterly reports in the normal way. However, the report will not include the VAT reclaim on the "Mileage". This can be added onto the Inputs and the Input VAT totals manually (ona separate summary) before inserting the relevant figures into the boxes on the VAT return itself.
The Input VAT amount reclaimed should be based on 50% of the mileage claim (per HMRC guidelines - unless you have a more accurate way of splitting the VATable costs included in mileage). To support the VAT reclaim, it is suggested that relevant VAT invoices are attached to your Mileage Claim form (following a court ruling in Holland about four years ago).
An example -
Mileage claim based on 1,000 miles at 40p per mile = £400.00
VAT caculation is £400.00 x 1/2 x 7/47 = £29.79
Therefore - Gross = £400.00
VAT = £29.79
Net = £370.21
Debit Motor Expenses - £370.21
Debit VAT Payable account - £29.79
Credit Director's Account/Drawings - £400.00
Debit - Motoring Costs with the VAT EXCLUSIVE value of the Mileage claim
Debit - the Tax Payable Account with the Input Vat you intend to reclaim
Credit - Director's Loan Account/Director's Current Account (or Drawings if a sole trader or Partner) with the VAT INCLUSIVE total
Run Off your VAT quarterly reports in the normal way. However, the report will not include the VAT reclaim on the "Mileage". This can be added onto the Inputs and the Input VAT totals manually (ona separate summary) before inserting the relevant figures into the boxes on the VAT return itself.
The Input VAT amount reclaimed should be based on 50% of the mileage claim (per HMRC guidelines - unless you have a more accurate way of splitting the VATable costs included in mileage). To support the VAT reclaim, it is suggested that relevant VAT invoices are attached to your Mileage Claim form (following a court ruling in Holland about four years ago).
An example -
Mileage claim based on 1,000 miles at 40p per mile = £400.00
VAT caculation is £400.00 x 1/2 x 7/47 = £29.79
Therefore - Gross = £400.00
VAT = £29.79
Net = £370.21
Debit Motor Expenses - £370.21
Debit VAT Payable account - £29.79
Credit Director's Account/Drawings - £400.00
I submit sufficient petrol receipts to approximately cover the fuel used for the mileage claimed, then claim the VAT on those receipts. ie 2000 miles, £800 mileage claim, fuel used about 65 gallons, fuel cost about £275, VAT reclaimed £40.96. The fuel receipts might add up to £280 or £290, as long as there are sufficient.
We had a VAT inspection last year and the lady inspector was quite happy with that method, whether it is 100% OK or not I don't know (and don't care).
We had a VAT inspection last year and the lady inspector was quite happy with that method, whether it is 100% OK or not I don't know (and don't care).
Getting back VAT on motor expenses can result in all sorts of varied techniques being applied.
If putting through motoring costs through the business using the Official Mileage Rates - as issued by HMRC, then the method I've outlined above is pretty much the best method for getting some VAT back.
You've got to remember that the official mileage rates are NOT entirely related to fuel costs and therefore VAT cannot be assumed to be included in all the 40p/25p per mile amounts. The claim is also supposed to cover Insurance, RFL, MOT costs etc which are VAT Exempt or Zero Rated. That is why HMRC suggested claiming VAT on 1/2 the mileage amount claimed.
If putting through motoring costs through the business using the Official Mileage Rates - as issued by HMRC, then the method I've outlined above is pretty much the best method for getting some VAT back.
You've got to remember that the official mileage rates are NOT entirely related to fuel costs and therefore VAT cannot be assumed to be included in all the 40p/25p per mile amounts. The claim is also supposed to cover Insurance, RFL, MOT costs etc which are VAT Exempt or Zero Rated. That is why HMRC suggested claiming VAT on 1/2 the mileage amount claimed.
Edited by Eric Mc on Wednesday 23 May 13:53
How do I post this in Sage?
I've posted it as a 7900... Is that right?
That's what I thought but it was the only bank thing that sounded vaguely right 
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