Vehicle Licences
OverheadsThis Overheads code records the cost of vehicle licences incurred in running the business. As an expense account, it normally carries a debit balance: debit entries increase the balance (recording new costs) and credit entries decrease it (for example, correcting an error or a refund received).
Real-world examples
Company car (single vehicle)
Vehicle Excise Duty (road tax) on a company car is outside the scope of VAT entirely — it's a statutory duty, not a taxable supply, so no VAT is charged and there's nothing to reclaim. A £195 VED payment is simply a debit of £195 to 7302 (Vehicle Licences) and a credit of £195 to 2100 (Creditors Control Account), with no entry to 2201 (Purchase Tax Control Account) at all.
Haulage or logistics (fleet operator)
A haulage operator pays VED for each HGV — calculated by weight and axle configuration rather than a flat car rate — and also pays an annual fee to the Traffic Commissioner for its operator's licence, the statutory permission required to run goods vehicles commercially. Both are treated the same way for VAT: as statutory charges outside the scope of VAT, so the whole amount is debited to 7302 with no VAT split out, however many vehicles the licence covers.
Commonly confused with
Because code 7301 (Vehicle Repairs and Servicing) sits right next to this one in Overheads, it's a common mis-posting target. Code 7302 is specifically for vehicle licences, while 7301 covers vehicle repairs and servicing — similar in nature, but keeping them separate is what makes the overheads section of your management accounts meaningful rather than a single lumped total.
What a mis-posting here costs you
An error posting to Vehicle Licences won't change total overhead spend, but it will distort the overheads breakdown that's usually reviewed line by line each month to spot cost creep.