Travel Expenses for the Self Employed: What can I claim?

As a self-employed individual, it's essential to understand what travel and subsistence expenses you can legitimately claim to reduce your taxable profits. The fundamental rule is that these expenses must be wholly and exclusively incurred for business purposes. This means there should be no private element involved in the expense.

What Travel Expenses Are Not Allowable?

Travel expenses that are not allowable, include commuting to a single fixed workplace and travel that incorporates a private purpose. Additionally, meals, drinks, and other subsistence costs are generally not deductible because everyone must eat and drink regardless of their chosen work. However, there are exceptions to this rule when you're away from your normal place of work.

Allowable Travel and Subsistence Expenses

Reasonable costs incurred while you are away from your normal place of work can be allowable. Here are some examples to clarify:

Example 1: Self-Employed Gardener

If you're a self-employed gardener based in Middlesbrough and working across the Teesside area, Teesside as an area, is considered your permanent workplace. So, if you work in Stockton-on-Tees for a day and buy lunch from a local shop or café, this expense is not tax deductible. You can pay this via your business account, but it wouldn’t be allowable as a tax deductible expenses, and wouldn’t reduce your profits and tax liability.

However, if you attend a training course in Newcastle for the day, the cost of your lunch there would be a tax-deductible expense. This is because the training course location is not your normal place of work. Consequently, this expense would reduce your profit and, therefore, your tax liability.

Example 2: Self-Employed Hairdresser or Beautician

As a self-employed hairdresser or beautician working in a salon five miles from your home, the salon is your permanent workplace. Therefore, travel expenses to and from the salon and food expenses while at work are not deductible.

If you're hired to do hair or makeup at a wedding requiring a 100-mile round trip, the travel expenses to and from the wedding are allowable. Additionally, reasonable subsistence costs, such as food and non-alcoholic drinks, are also deductible. It's important to note that alcoholic drinks are only usually allowable as subsistence expenses if one drink is purchased alongside a meal for the business owner only, not for others.

Applying Common Sense

Common sense is crucial when determining what expenses are allowable. You cannot claim for a meal just because you're visiting a customer or client a short distance from your home or usual workplace.

Legislation and Guidance

The rules governing these expenses are detailed in section 57A of the Income Tax (Trading and Other Income) Act 2005 (ITTOIA 2005) and are further explained in HMRC’s Business Income Manual at BIM47705.

By understanding these guidelines, you can ensure that you only claim legitimate travel and subsistence expenses, helping you manage your tax affairs efficiently and avoid any issues with HMRC.

Disclaimer

The information provided on this blog is for general informational purposes only. All advice and opinions shared here are based on personal experience and are not intended to replace professional consultation. We recommend seeking the guidance of a qualified expert or professional before making any decisions based on the content of this blog. We do not assume any liability for any damages or losses that may arise from your use of the information provided. Use this information at your own risk.