An introduction to expenses and mileage

Welcome to expenses and mileage in FreeAgent! This article is an introduction to business expenses and mileage – which are expenses paid out of your own pocket and mileage travelled in your own car – and explains how to record them in FreeAgent.

What are expenses in FreeAgent?

If you use personal funds to spend money on goods and services for the business, for example a train ticket for business travel, these are recorded as out-of-pocket expenses in FreeAgent.

However, if the cost was paid for using business funds, you should explain the bank transaction instead once it’s been imported into FreeAgent via a bank feed or bank statement upload. Alternatively, you can add a bill if the cost has been incurred but hasn’t yet been paid for. Find out more about the difference between an expense, a bill and a bank payment.

Please note that the earliest an out-of-pocket expense should be dated is your FreeAgent start date. If you enter an out-of-pocket expense dated before your FreeAgent start date, this will add a negative brought forward balance in the 'Expenses' area. Find out how to enter an expense dated before your FreeAgent start date.

What are mileage claims in FreeAgent?

If you travel on business in your own car (that’s not a company car), you would record this as a mileage claim in FreeAgent. Please note that if you have a sole trader or partnership FreeAgent account type, you cannot claim bicycle mileage.

FreeAgent will apply the HMRC approved mileage rate depending on the type of vehicle you travelled in. Find out more about claiming motor expenses.

If your business is registered for VAT, you may be able to reclaim the VAT on the fuel if you have a VAT receipt for the fuel and it’s enough to cover the mileage travelled on the journey. Please note that you can only reclaim the VAT on the fuel, not the full cost of the mileage travelled. FreeAgent will work out the correct VAT reclaim for you when you enter the fuel type of your vehicle and the capacity of its engine.

How to add out-of-pocket expenses and mileage claims

Before an out-of-pocket expense or mileage claim can be added for an individual, they need to be added as a user to the FreeAgent account first. Please note that if you’re the only user on the FreeAgent account, you’ll not have the option to select the relevant user as your user profile will be selected automatically.

If you're a sole trader and you have no staff, navigate to the 'Expenses' tab at the top of the screen.

If you have staff, or your business is a partnership or limited company, navigate to the ‘My Money’ tab at the top of the screen and select ‘Expenses’ from the drop-down menu.

Select ‘Add New’ in the top-right corner, choose either ‘Expense’ or ‘Mileage Claim’ from the drop-down menu and enter the relevant details. Find out more about how to add an out-of-pocket expense or mileage claim.

You can also import out-of-pocket expenses and mileage claims in bulk if you need to.

You’ll see a record of how much the business owes each user in the ‘Balance Owed’ column so that it can pay them back the correct amount.

Please note that the running total won’t appear if you’re viewing ‘All’ of the out-of-pocket expenses for the user.

Any money that the business owes you for business expenses you've incurred personally will show in your accounts on your Balance Sheet under ‘Expense Account'.

If the business then reimburses you for the cost or mileage, you can explain the expense repayment.