Do you travel for your business? If so you should make sure you understand what the main tax deductible travel expenses are – and what you can’t claim.
The main rule is that the travel can’t be to your normal place of business. So if you are travelling to your own office, or if you always work at one client site, then you can’t claim travel expenses. If you are travelling to other sites then you should be able to offset reasonable travel expenses against your business profits.
The top 5 tax deductible travel expenses for self employed are:
- Tickets! If you are travelling wholly and exclusively for business purposes then any plane, train or bus tickets are tax deductible;
- Other similar travel expenses are also fine – e.g. taxis, parking, tube travel (although if you have an Oyster card which you also use for personal travel then its not “wholly and exclusively” for business travel so you could only then claim if you have to pay extra to go to a different zone) – get and keep receipts wherever possible;
- Motoring expenses or mileage. As a sole trader, if you use your car for business travel, you can either deduct actual motoring expenses, or mileage (if your turnover was below the VAT threshold when you bought the car). Either way you need to keep track of your business miles. If you deduct mileage, you need to add up all your business miles – and make sure you have a record of what the business trips were to support the miles claimed – then calculate your deduction at 45p per mile for the first 10,000 miles, and 25p per mile after that. If you take actual motoring expenses you need to keep track of all your motoring costs (including purchase cost of vehicle as you may be able to claim capital allowances) including petrol, insurance, road tax, MOT, repairs, and calculate your business use proportion – so if you do 9,000 miles a year of which 3,000 are for business, take 1/3 of your motoring expenses against your business profits. Click here for more info on car expenses.
- Costs of overnight accommodation. A couple of points to bear in mind… if you are going on holiday and happen to have a business meeting when you are away, you can’t claim for the costs of the holiday, although you may be OK to claim for an extra night if you had to extend your holiday to attend the meeting. If you are going away for a business trip and decide to take your family with you, your costs should be tax deductible, but your family’s costs are not (unless your spouse is also involved in the business, and then their costs may be).
- Subsistence – but ONLY if overnight stay involved. A lot of self employed people think that claiming costs of lunch, coffee, etc. is OK if they have a day long business trip, but that isn’t the case (although the rules are different if you are a limited company director). You can only claim reasonable costs of meals if you stay overnight, and then generally only dinner and breakfast, lunch still would not be tax deductible.
If in doubt keep track of the expenses, keep receipts, and ask your accountant when you get back.
Please note all of the above applies to sole traders, and the rules are slightly different if you are a limited company director!
