One of the biggest questions newly self-employed people ask me is about their travel and subsistence and what they are allowed to claim. So I thought I'd put together a little blog post about it ...
I get so many questions about self employed travel and subsistence!
You can only claim deductions for expenses you incurred exclusively for your business. In practice, this means that where travel costs are incurred for both business and pleasure, you must be able to identify your business journeys to be able to claim them.
"Always keep a detailed record of your business mileage!"
Thankfully, many of the mainstream bookkeeping systems have apps that can track this for you. I know that Xero and Quickbooks do this, and they'll list any journeys they noticed and let you flag them as a business journey which your accountant can then claim the mileage for.
However, if you have an office that is separate from your home, you can't claim for the commute between the two. The benefit to working from home is that when you go onsite to a customer or client, you should always be able to claim that journey.
But do be careful. Don't set up an office at home then say that your main premises are a customer. HMRC will challenge this position if they suspect you are trying this, and they are very experienced in rooting this out. They are clamping down on this right now.
When it comes to your motoring expenses, you have a couple of choices as to how you claim for them. You can claim some of your total car costs each year (based on your business mileage), or you claim a flat rate per mile. I prefer the flat-rate method as the more mileage you do, the more of the total car costs you can claim.
Other travelling expenses you can claim include parking fees, road tolls and congestion charges, as long as they relate to a business trip. VAT can also be claimed if they are business-related. And don't forget that if you have a loan specifically to purchase a car or van, you can claim tax relief on the interest of the loan capital. You can also include bus and train fares too.
When it comes to food and drink when you're away from your place of work (where there is no overnight stay), in general, you cannot claim these back. There was a precedent tribunal case many years ago that established food and drink cannot exclusively be a business expense because we all need to eat and drink to live.
There are occasional exceptions here, such as breakfast on the way to a business conference in a different part of the country, so it's worth keeping the receipts, but don't expect many of them to be included as a deduction on your tax return.
However, when you make a business trip and need to say away overnight, hotel accommodation and reasonable overnight subsistence costs can be claimed, but do be careful of overclaiming. Staying at the Ritz and eating in 5-star restaurants will be looked on poorly, whereas a Travelodge and a cafe meal would be fine. Receipts for champagne at a nightclub definitely can not be claimed.
"Other useful allowances include working from home costs!"
If you work exclusively from home, then you can claim nearly £30 per month for your gas and electricity. If you live at your work premises (for example, a B&B), then you can claim a larger deduction for the number of people living there, starting at £350 per month, per person. And finally, work training and logoed workwear are permitted, but business attire is not (because you could wear it for a personal event).
And the last piece of good news is that your accountancy fees are tax deductible too.
Until next time ...
ROGER EDDOWES Business Godparent
Would you like to know more?
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Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach.
Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.
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