Travelling

This Overheads code records the cost of travelling 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

National consultancy

A consultancy visiting client sites across the country relies heavily on rail travel. UK passenger transport — trains, buses, the underground — is zero-rated for VAT, so even a substantial £340 rail fare carries no VAT at all: the full £340 is simply a debit to 7400 (Travelling) and a credit to 2100 (Creditors Control Account), with nothing to post to 2201 (Purchase Tax Control Account).

Local trade business

A local trade business rarely travels beyond its usual area, so this code sees the occasional taxi fare rather than a regular pattern of rail journeys — for example when a company vehicle is off the road and staff need to reach a supplier or site. Most local taxi and minicab firms aren't VAT-registered, so, like the rail fare above, there's typically no VAT to reclaim; only the minority of VAT-registered operators would issue a VAT invoice showing a split.

Commonly confused with

Because code 7401 (Vehicle Hire) sits right next to this one in Overheads, it's a common mis-posting target. Code 7400 is specifically for travelling, while 7401 covers vehicle hire — 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 Travelling 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.

Other codes in Overheads