Claiming Travel Expenses: A Guide For The Self-Employed

If you're self-employed, you can claim travel expenses as a tax deduction. This includes the cost of transportation (e.g. flights, train, bus, car rental, and taxi fares), meals, accommodation, and other related expenses. However, it's important to note that these expenses must be exclusively for business purposes and incurred while travelling away from your tax home, which is typically the city or area where your main place of business is located. Additionally, you cannot claim expenses for your regular commute to and from work unless you are travelling to a temporary place of work. Good record-keeping is essential when tracking and claiming travel expenses to ensure you comply with tax regulations.

Travel and subsistence expenses

If you're self-employed, you can deduct some of your business's running costs from your taxable profit as long as they're allowable expenses. Travel and subsistence expenses are allowable, but there are rules about what you can claim.

Travel

Travel costs are allowable expenses. This includes fuel, parking, train or bus fares, and the running costs of a car or other vehicle, including petrol, car tax, insurance, repairs and servicing. If you use your own vehicle for business purposes, you can claim a mileage allowance. This is 45p per business mile travelled in a car or van for the first 10,000 miles, then 25p per mile thereafter; 24p a mile if you use a motorbike; and 20p a mile for bicycles. You can also claim an additional 5p per mile for each extra passenger you’re driving for work purposes.

You can only claim for travel that is "wholly and exclusively for business purposes". You can't claim for journeys to and from your usual place of work if you have an office or commercial business premises. But you can claim for travel to a temporary workplace, for example, if you travel to different sites and jobs to work. A temporary workplace is defined as somewhere you will spend less than 40% of your time, or if you don’t expect to work at that location for more than 24 months.

If you have a permanent base that is separate from where you live, travel between home and that base is regarded as ordinary commuting and will not be tax-deductible. If you work from home, you can claim the cost of travel between your home and where your work is carried out.

Subsistence

Subsistence includes accommodation, food and drink costs while away from your permanent workplace. The cost of subsistence is treated as part of the cost of travel.

The cost of food, drink and accommodation is generally not considered incurred wholly and exclusively for business purposes, since everyone must eat to live. However, extra costs may be incurred wholly for business purposes where occasional business journeys are made outside the normal pattern. In these circumstances, modest expenses incurred may be deducted from business profits.

Where a business trip requires you to stay away from home, hotel accommodation and reasonable overnight subsistence costs will be tax-deductible. However, where your business base is away from home and you pay for overnight accommodation and subsistence simply to be near where your business is situated, this expenditure will not be tax-deductible.

Mileage allowance

If you're self-employed and use your own vehicle for business purposes, you can claim a mileage allowance to recoup some of the money spent on travel. This includes the cost of buying a car, van, or motorcycle, as well as fuel, insurance, servicing, repairs, and parking.

There are two methods to calculate your mileage allowance:

• Total expenses method: This involves keeping a record of all motor expenses, including fuel, servicing, insurance, and licence fees, as well as a mileage record book showing business and private trips. You then work out the proportion of business miles to total mileage and use this to apportion the total cost. This method can be more time-consuming but may produce a more accurate result, especially if your motoring costs are high.
• Simplified expenses or fixed-rate mileage allowance: This method uses a flat rate per mile, which is currently 45p for the first 10,000 business miles travelled in a car or van and 25p per mile thereafter. For motorcycles, the rate is 24p per mile, and for bicycles, it's 20p per mile. This method is quicker and easier for tax administration, but you cannot claim separately for motoring costs such as insurance, road tax, or fuel, as these are included in the calculated amounts.

It's important to note that you cannot use a combination of both methods, and once you choose one, you must continue using it for the same vehicle. Additionally, mileage allowance claims are only applicable for business trips and cannot be claimed for personal journeys or travel between your home and usual workplace.

To support your claim, it is recommended to log all your business mileage, including dates, start and end addresses, and total distance. This will make it easier to claim the correct amounts and provide credible evidence if HMRC requests proof during an investigation.

Travel between home and work

If you're self-employed, you can deduct some of your business's running costs from your profits to work out your taxable profit. These are called "allowable expenses". Allowable expenses include travel costs, such as fuel, parking, train or bus fares.

If you have a base of operations that is separate from your home, the cost of travelling between home and that base will be treated as ordinary commuting and will not be tax-deductible. However, if your base of operations is at your home, then the cost of travelling between your home and where the work is carried out should be an allowable expense.

Determining your base of operations can be difficult. In recent cases, contributing factors have included the facts that business records were kept and written up at home, tools and equipment were kept at home, and new work was sourced from home.

If you use your own vehicle for business purposes, you may be able to claim a proportion of the total cost. This includes buying a car, van, or motorcycle, and associated expenses such as fuel, insurance, servicing, repairs, and parking. You'll need to keep accurate mileage records for five years from your applicable tax submission, including all business mileage with the date, start and end addresses, and the total distance. If you're mixing personal and business use, you'll need to keep records of both to calculate the work percentage.

Sole traders can choose to use a flat rate mileage allowance as part of the simplified expenses offered by HMRC to make tax admin quicker and easier. For this, you just use a flat rate intended to cover all vehicle costs. You'll only need to record your business mileage.

Business trips and accommodation

When it comes to business trips and accommodation, there are a few things to keep in mind to ensure you can claim any expenses back. Firstly, the reason for the journey is important. If it is solely for business purposes, such as visiting a client, then you can claim the full cost of the trip in your business accounts. However, if there is a private element to the trip, you need to determine whether the business and private elements can be separated. If they can, then you can claim only the business costs. If they can't be separated, then you cannot claim any costs for that journey.

When it comes to transport, you can claim the full amount spent on the journey, even if there was a cheaper method available. This includes costs for public transport, such as trains, buses, and planes, as well as taxis and other types of transportation between the airport or train station and your hotel, and between the hotel and your work locations. If you use your own vehicle for business trips, you can either claim the actual cost of running your vehicle or use simplified expenses, which involve multiplying the number of business miles travelled by a flat rate per mile. It is important to maintain detailed records of your vehicle expenses and mileage to support your claims.

Accommodation costs, such as hotel bills, are also claimable as business expenses if you need to stay overnight for business purposes. It is important to ensure that the costs are reasonable and solely for business purposes. Meals on overnight business trips can also be claimed, but again, the costs should be reasonable. Other allowable expenses while on a business trip include dry cleaning and laundry, business calls, Wi-Fi, shipping, and other similar ordinary and necessary expenses.

It is important to keep good records of your expenses and seek professional advice from an accountant if you are unsure about what you can and cannot claim.

Running costs of a vehicle

If you're self-employed, you can deduct the running costs of a vehicle from your taxable profit. This includes the costs of buying and running your vehicle.

Actual Costs Method

This method involves tracking every expense related to the vehicle. You will need to keep detailed records of insurance, fuel, repairs, and maintenance. This method is more precise but requires meticulous tracking.

Simplified Expenses Method

This method uses a fixed rate per mile for business travel, simplifying record-keeping. While this method is easier, it might not cover all expenses as precisely as the actual cost method.

Capital Allowances

If you use traditional accounting and buy a vehicle for your business, you can claim this as a capital allowance. This method allows you to claim some of the cost of the car against your tax bill each tax year. The rate at which you are allowed to claim depends on factors such as the type of vehicle and its CO2 emissions.

Flat Rate Mileage Allowance

If you're self-employed, you can claim a mileage allowance of:

• 45p per business mile travelled in a car or van for the first 10,000 miles, then 25p per mile thereafter
• 24p a mile if you use your motorbike for business journeys
• 20p a mile for bicycles

You can also claim an additional 5p per mile for each extra passenger you’re driving for work purposes.

What You Can't Claim

You’re not able to claim mileage allowance for personal journeys. You also can’t claim for journeys to and from your usual place of work if you have an office or commercial business premises.

Frequently asked questions