Welcome to the Community, @dalvinderpalmain101. In QuickBooks Solopreneur, both fuel and mileage are not exempted from the tax. However, they can be claimed as allowable expenses to reduce your taxable income as a sole trader.
There are two methods to account for car-related expenses: Simplified Expenses and Actual Expenses. Consulting an accountant or tax advisor is recommended to make the best choice depending on your specific circumstances and to confirm the taxability of these expenses. Let me explain these methods further:
- The Simplified Expenses method utilizes set rates provided by HMRC for tax deductions. It is simpler as it doesn't require detailed tracking of all car expenses. However, because these are not direct cash expenses, they do not appear in the Profit and Loss (P&L) statement.
- On the other hand, Actual Expenses method involves keeping a detailed record of all vehicle-related costs, such as insurance, fuel, repairs, and maintenance. These expenses should be recorded in QuickBooks as transactions. If your bank account is linked to QuickBooks, you can categorise these transactions directly, allowing them to reflect in your Profit and Loss statement.
For more information, you can refer to this article: Car mileage and travel expenses explained in QuickBooks Solopreneur.
Additionally, consider this resource for recording your business miles and vehicle expenses in QuickBooks, which will help ensure accurate deduction calculations during tax seasons: Automatically track mileage in QuickBooks.
If you have further questions regarding how to handle mileage taxes, please don't hesitate to click the Reply button. I'm here to assist you further!
