Tax allowances and how to include them into QB online

Including your mileage and working from home allowances in QuickBooks Online (QBO) is my priority, and I'm here to share further details about this, @DaveDos.

In QBO, you can use the mileage tracker mobile app to efficiently record simplified expenses. It has a mileage calculator to track each journey and automate your deductions. To learn the best way to track business mileage, you can refer to this article: Claiming business mileage the easy way.

Then, to include your mileage and working from home allowance into our accounts, you'll need to create new ones from your Chart of Accounts (COA). I would encourage you to consult your tax advisor for advice to appropriately set up the accounts.

Whenever you're ready, follow these steps:

1. Go to Accounting on the left menu.
2. In the Chart of Accounts tab, click New in the upper-right corner.
3. You can then select the correct type of account, the detail type, and any description as required ( as recommended by your accountant).
4. Enter the name of your account (i.e., Mileage Allowance and Working from Home Allowance).
5. Click Save and Close.

Also, to further guide you ways in calculating your mileage expenses and working from home allowances, I'd recommend checking out this page: Simplified Expenses Checker.

Please let me know in the comments if you have other tax allowances concerns in QBO. I'm always ready to help. Take care, and I wish you continued success, @DaveDos.

Rea_M 

Thanks for your reply. I already know how to track mileage and create new accounts. My question is how to bring in my mileage allowance, which this year is £3,510  (ie 7800 miles @ 45p per mile ) so it shows on my profit and loss report. I need to enter that £3510 as an allowance against my profit. It's not something that, as far as I see, can be entered as an expense because I haven't spent that amount ie. It hasn't come out of a cash or bank account.  The same applies to my working from home allowance which this year will be £312. Again I am not spending this money, it is an allowance that HMRC allows me to claim against tax.

As far as I am aware the self employed version of QB does facilitate the addition of these HMRC allowances but QB online doesn't. Am I correct ?

We do not use an accountant as our affairs are very basic. It would be useful if QB could explain how to enter these figures into QB. 

Thanks again for your reply

Hi @DaveDos 

I think you're mistaking what QBO is for.  It's accounting - to give your profit/loss, etc - it isn't tax filing software.

At the end of the financial year, QBO will give you (assuming everything has been entered correctly) your gross profit for the year - if you're self-employed, that's your top-line earnings if you like.

When you come to complete your tax return, that's when the allowances come into play - the allowances are entered into the return, not into QBO.

(in effect the allowances increase your tax code rather than decrease your earnings)

Hope that helps.

Hi @paul72 

Thanks for your reply. I do appreciate it. However i'm not sure that what you have said applies to us. I do take your point about the limitations of QBO.

For 25 years now my wife and I have been in a small business partnership and every year we file a paper partnership tax return. The figures entered into the partnership tax return are as follows . Turnover, expenses and profit ...that's all. Included with the allowable expenses are the simplified expenses that we claim. These are the mileage  allowance (miles X 45p) and our working from home allowance . Together they form the total expenses claimed.  At the end of the partnership tax return we declare both partners share of the business profit.  It's those figures that are declared on our personal tax returns that we both submit later in the year. But the allowances are applied to the partnership return,  not our personal tax account.

Until using quickbooks this year I used a spreadsheet to enter everything and the years trading figures with no problem.  Quickbooks online is a much quicker and more reliable way to keep our accounts up to date and everything else has been great. But... I was sold QBO as a solution that was 'making tax digital ready for a partnership. I would argue that it isn't because for us there seems no way, or at least QBO help has not been able to show me a way, to incorporate these business allowances into our annual accounts.

Quickbooks online help can only tell me to get my accountant to show me a workaround to this issue. I don't use an accountant and anyway I think that QBO should explain how to do this workaround seeing as it's their program i'm using.

I'm not the only one to have asked about this and i see no answers as of yet.  But thanks again for your help.

Hello DaveDos, hope you're doing well.

I am facing exactly the same issue as you and was provided the following link as a "solution": https://quickbooks.intuit.com/learn-support/en-uk/expense-accounting/vat-only-100-vat-transaction/00.... I am actually unsure if this will be helpful to me as my business is not VAT registered but maybe it's of help to you so sharing just in case.

Kind regards

E 

Thanks ericadbr

Yes like you we are not VAT registered. And yes the 'solution' you mention is of no use to us. 

I just can't understand why quick books online doesn't allow for adding these 'allowances' into our annual accounts. That is after all what we have to do prior to submitting our tax returns..

There must be thousands of small business owners like us that use simplified expenses when preparing their annual trading figures. We're not a special case here !

TBH  as QB online does not feature a way of incorporating these allowances into our annual accounts I think that we will cancel our trial subscription pretty soon. I do like a lot of things about quickbooks online but it is of no use to me for making tax digital so I see see little point in paying for it.

Hi Paul , I totally get what @DaveDos is requesting and it is a quickbook issue , I am a courier , I drive for a living , so far this year (June 2022) i also have £3,332 of driving potential deductions to be added to my quickbooks online as well as other items we can claim for on our year end tax , however in quickbook self employed the software automatically puts this as an expense deduction into the software for you , solution completed however using quickbooks online this is no where to be seen , so why don't you raise this issue with your software team and update quickbooks online with the self employed code so we can use this and put mileage as an expense without creating a new line everytime we enter the mileage that we have tracked using quickbooks mileage , 

please reply

Yours kindly

Paul M

---

@Paul Mirfin wrote:

Hi Paul ,

... so why don't you raise this issue with your software team and update quickbooks online 

please reply

Yours kindly

Paul M

---

because I'm nothing to do with Intuit/Quickbooks!

I'm just like you - a paying (& sometimes disgruntled) user that takes time out of their day to offer advice & workarounds to an imperfect system.

There are a couple of workarounds to this.  They're slightly convoluted & I've been meaning to get an hour or so to get them straight in my head - but they don't get around the fact that these expenses are personal & should be on the personal tax return(s) not on the partnership return.

Paul , Accept my apologies , i read it as you were part of the team , I went back in and saw you were not , my big mistake

Sorry

Did anyone get any further with this?

k am having the same issue.

Paul   thanks for reply.  I do have to correct you though. Our mileage allowance is an expense that has to be entered into our business accounts, not on my personal tax return.

No not really made any ground with this. At present we are just using Quick Books as a book keeping tool, and it does that job well. When it comes to preparing end of year trading figures QB isn't up to the job yet. Hopefully in time we will be able to enter our mileage allowance as an expense (which it is) and also our working from home allowance. When this does happen then we will be able to create an accurate profit and loss account for our business partnership and use the figures to submit on our partnership tax return. Until that day we will continue to prepare our trading figures on exel.  We live in hope !!

Is there actually a proper explanation of how to handle this in Quickbooks Online? I have Simple Start because I was told it was the better option going forward over using QBSE, however the handling of work from home expenses in Quickbooks Online is backward step from Quickbooks Self Employed it seems?