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Running your own business usually involves some sort of costs, but the good news is that you can normally claim tax relief against your allowable expenses, including your work-related travel.

For employees this is pretty straightforward – just hand the receipts over to your employer and let them sort it out. For self-employed people it can be a bit more confusing, so we explain what travel expenses you can claim for, and how to claim.

Is it worth claiming expenses on my tax return?

What travel expenses can I claim?

What counts as a travel expense?

How do I claim my travel expenses?

Yes! As a business owner you can, and should, claim for business expenses. HMRC tax businesses on their profits, not their income, so deducting your allowable expenses from the income you earn helps reduce your tax bill.

The key word here is ‘allowable’ expenses. Travel costs can count as a business expense, but there are limitations as to what types of travel you can include.

The golden rule with any type of expense is that it’s “wholly, exclusively and necessary” for the business. You can claim for travel costs, but only if they’re business related. No school runs and shopping trips on HMRC, we’re afraid!

Commuting costs versus business travel expenses

It’s absolutely crucial that you make sure you can distinguish between a commute, and a travel expense, because commuting costs are not an allowable expense.

The 24-month rule for contractors

The whole ‘no claiming for commuting costs’ is a bit more complicated if you’re a contractor who needs to travel to the client’s workplace every day.

To try and keep things fair, HMRC allow contractors to claim travel expenses for the journey from their home to the client’s premises, but only if it’s a ‘temporary workplace’, which is where the 24-month rule comes in.

The location is only classed as a temporary workplace if the contractor will be there for 24 months or less. For example, if you sign up for an 18-month contract to work out of your client’s offices then you can claim the travel costs as an expense. But, sign on for a 30 month contract, and you can’t.

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If you can only claim for business-related travel expenses, what does this actually apply to? Some examples of what you can claim for include the following:

You’ll need to include the total amount of expenses you’re claiming on your tax return – the type of tax return you fill in depends on the structure of your business. For example, a sole trader will include their expenses on their Self Assessment tax return.

You won’t need to hand over the proof of your expenses with your tax return, but it’s important to keep hold of any supporting evidence anyway. There’s always a chance that HMRC will decide to carry out a compliance check!

Learn more about our online accounting services by calling 020 3355 4047 and get an instant online quote.

About The Author

Lisa Hinton-Hill

I've worked in the accountancy sector for more than 15 years, and have extensive experience supporting sole traders, partnerships, and SME's. Learn more about Lisa.

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