Start Up Cash Expenses Fuel, Timber etc

If these expenses are paid with cash out of your (or your employees') pockets, then you should use the Enter Bills facility.

Be careful with fuel costs, though. If the fuel is put into your (or your employees') private car(s) then do not reimburse directly. If it is to put into company owned vans or trucks, then charging the fuel to the company is fine.

To reimburse employees for running their cars on company business, the approved way to do this is for the employee to log business mileage each week and the company to enter a bill for the mileage charges (45p per mile for the first 10,000 miles in a tax year, and 25p per mile thereafter). If the fuel vouchers are retained by the employer, then the employer can also reclaim the VAT on the fuel element of the mileage charge (which is 12p per mile).

If the business were to reimburse employees for fuel costs directly, then the private element would need to be calculated and National Insurance (employee and employer) charged to the employee/company at the end of the payroll year.

See this article for more detailed guidance on use of the above.