Pete.. you are a star. Took me 10 mins to do an analysis that used to take 2 hours.
SDCH... thanks for your contribution as-well.. its much cleaner.. but I will be using Pete's as it shows split calculations; if something goes wrong i can identify any errors.

I have another query. Let say that instead of just the date I also have the time: As follows:

FROM--31/12/2013--13:00:00--TO--07/01/2014--17:00:00--8 days

Obviously actual calculations is 7 days plus 4 hours; but the system would be charging 8 full days. With your (Pete/SDCH) formulas, it obviously picking up 7 days. But i would need it to pick 8 days as per the Number of days column. Is there a 'restriction that can be made... that the number of days split between the months; must equal this column.
In the case above I would have 1 day in December and 7 days in January. I don't actually need to use the time... but explained it to you for simplicity sake.

Many thanks
Sam