Travel Expenses and Subsistence for Self Employed

Travel Expenses and Subsistence for Self Employed

Travel expenses and Subsistence on the self-assessment return are often challenged by HMRC.

Subsistence is related to business travel – so if your travel is qualified as business, you can claim reasonable subsistence expenses.

Many Self-employed would claim all travel without fully understanding what rules need to be applied for this to be qualified as business expenses.

Using your car – claiming Mileage or business portion of actuals costs

So, what to take into consideration when calculating, and making the classification between Business and Personal travel:

“Base of operation” - Place where you are keeping paperwork and contacting clients, keeping tools etc.

"itinerant" – when someone’s job can’t be performed from home which is the “base of Operation” – then all travel to customers from Home to clients would be allowable unless there is a Normal habitual pattern – which basically means there is no clear pattern during the extensive time.

If your home is not the base of your operation you can’t claim expenses for a trip from your home to the base of operation.

So, when you can claim and when not examples:

Example Hairdresser

You can claim if you are:

Mobile hairdressers visiting different clients from Based of operation (usually your home) to clients

You can’t claim

If you have a chair in salon and you are there every Tuesday, you can’t claim for a trip between home and the salon as it is the normal habitual pattern.

Example Carpenter/Electrician/other Construction Workers

You can claim if you are:

Working for many clients at the time at a different locations and on different days – example of Carpenter who builds bespoke furniture for different private customers

You can’t claim if you are:

Based on one building site and your pattern and location are known and stay the same (normal pattern)

If you want to answer two questions is your journey is allowed expenses, ask yourself a question:

Does business conduct at one location makes it the “base of operation”?

If travel can be viewed as regular and predictable?

If you answer yes to any of these questions it's likely this would not be the allowable expense.

How you can claim your expenses for travel (car/van/motorcycles)

You can choose to use a Flat rate/simplified expenses:

Where you are recording your business mileage and expense are calculated by multiplying the number of miles by current HMRC rates (Simplified expenses if you're self-employed: Vehicles - GOV.UK (www.gov.uk))

Total number of miles during a year

Flat rate up to 10000 miles 45p

Flat rate After 10000 miles 25p

Total Expenses claimable

  Car/Van

15000

10000*£0.45=£4500

5000*£0.25=£1250

5750

(Motorcycle current rate is 24p – not depending on the number of business miles travelled)

Or you can get actual costs: petrol/diesel, insurance/tax, repairs, service, parts MOR, Recovery

But only the proportion of these costs relating to business use can be treated as business expenses

So, you still need to keep a record of mileage to calculate the value of these expenses. Under the actual method, you can claim capital ALLOWANCES.

With costs of petrol/diesel at an all-time high. It is worth exploring both options.

Do you have additional questions? email us: Contact@izzyacs.co.uk

Useful Links

Other travel expenses you can claim against your income:

Any business related

Parking

Hire charges

Train bus air and taxi fares

HMRC Links

Expenses if you're self-employed: Car, van and travel expenses - GOV.UK (www.gov.uk)

BIM37620 - Business Income Manual - HMRC internal manual - GOV.UK (www.gov.uk)

BIM37670 - Business Income Manual - HMRC internal manual - GOV.UK (www.gov.uk)

BIM37660 - Business Income Manual - HMRC internal manual - GOV.UK (www.gov.uk)

BIM47705 - Business Income Manual - HMRC internal manual - GOV.UK (www.gov.uk)