Congestion Charges
OverheadsThis Overheads code records the cost of congestion charges 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
Courier or delivery (central London)
A courier or delivery business operating in central London pays the congestion charge and, for older vehicles, the Ultra Low Emission Zone (ULEZ) charge every time a vehicle enters the zone. These charges are generally treated as outside the scope of VAT — Transport for London administers them as a statutory traffic-management charge rather than a business supply — so a typical account statement is posted in full to 7305 (Congestion Charges), with nothing split out to 2201 (Purchase Tax Control Account).
Business outside charging zones
A business based outside London or another charging zone may never use this code at all, or only rarely — for example a one-off trip into the zone for a client meeting. Because charges are usually billed automatically to a linked account rather than invoiced individually, many businesses simply post the monthly account statement as a single lump sum to 7305 rather than tracking each individual charge.
Commonly confused with
Because code 7304 (Miscellaneous Motor Expenses) sits right next to this one in Overheads, it's a common mis-posting target. Code 7305 is specifically for congestion charges, while 7304 covers miscellaneous motor expenses — 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 Congestion Charges 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.