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Tax deductible expenses

Travel

The tax authorities (HMRC) guidance on this is that travel for business purposes is allowable unless it is deemed to be “commuting”. It is then clear that any travel for employees to and from work is deemed normal and the expense is not allowable. However, there is an exception where you are working away from your normal place of business.

Temporary Workplace – the 24 month rule

A temporary workplace is when you work at a location that isn’t your own office. It is not one particular office or client, but a particular location, e.g. the West End or Canary Wharf.

If you work from a certain temporary workplace for less than 24 months, the travel expense becomes allowable.

However, once the 24 month period expires, the expense claim becomes obsolete.

If your contract is extended?

Once you know that you will be working in one place for longer than 24 months, the expense is not allowable at all. Unfortunately, this means if you have a contract for 30 months, you will never be able to claim the expense.

It also means if you receive a 12 month contract and then another 12 moth contract. None of the travel in the second 12 month contract is allowable.

What records should I keep?

If you are travelling via public transport then you must keep a fully legible receipt. However, for car travel you must keep a log of your business miles.

You only need to keep a petrol receipt if you would like to claim back the VAT on the travel. Furthermore, this depends on which VAT scheme you are on.

Mileage

You can claim the following mileage rates:

Approved mileage rates

From 2011/12
First 10,000 business miles in the tax year
Each business mile over 10,000 in the tax year
Cars and vans45p25p
Motor cycles24p24p
Bicycles20p20p

In addition, if you have a passenger in the car, you are entitled to an extra 5p. Parking fines and tickets are not allowed, but the London Congestion Charge is allowable.

Our award winning online accounting software takes care of all your mileage claims – you simply need to enter the number of miles you have travelled and let the system do the rest.

Next: “Claimable Expenses: Accommodation”
Any questions? Speak to one of our friendly accountants on 020 7969 2879.