Clients often get confused as to which work travel expenses may be allowable or not. The following article is going to highlight the common items that I often have to clarify with clients. You may be reading this from various perspectives, as an employee, a sole trader or an owner/director of a limited company, I will try to cover some of the different aspects of travel expenses that may be relevant to you.
Place of work
As an employee you will not be able to claim your travel costs to your main place of work, therefore it is important to understand where your main place of work is. Increasingly some employees place of work may be their home, as they may be home-based employees. If this is the case for you then you may be able to claim travel costs from your employer if you occasionally have to attend a meeting one of your employer’s offices/premises.
How much you can claim is up to your employer, as it is up to the business’s travel policy as to what they will reimburse you for. Currently the basic mileage allowance is 45p per mile, however, some companies may have a policy where they only reimburse a smaller amount e.g. 25p per mile and rarely some businesses may reimburse at a higher rate. If they reimburse at a higher amount you will be subject to a benefit in kind tax, and the excess will appear on your P11D.
Temporary Work Place
If your work place is going to be for a period of less than 24 months, it may qualify as a temporary work place. If so, then your travel to and from this place is claimable.
Travel Expenses Example 1
Daniel has his own IT company and has just secured a 12 month contract at IT Contractors Ltd.
As the contract is clearly under 24 months he is able to claim for his journey costs and potentially subsistence costs.
Detailed guidance for temporary work place is in the HMRC guidance EIM32080. There are also some exceptions if you are considered to be an agency worker.
HMRC has set some benchmark scale rates for subsistence; however, in many cases actual costs via keeping receipts may actually be higher. For an employee food can be claimed if they are travelling on business or working unusual hours. Below are a few examples.
Travel Expenses Example 2
Christopher normally works 9am to 5pm, however, he has been asked to work longer hours in order to complete a IT install on schedule. He has occasionally arrived at the office at 5am to get lots of work done whilst it is quiet.
On these days he can claim the £5 breakfast subsistence allowance.
Travel Expenses Example 3
Liam has to attend a conference in London, although his regular place of work is Reading, it will be a long day and he will be there ten hours.
In this instance he can claim the two meal rate of £10 as he is working at least ten hours. However, if he kept receipts for the meals he purchased, he may find he is better off claiming for the actual cost.
For more details of benchmark subsistence rates go to http://www.hmrc.gov.uk/briefs/income-tax/brief2409.htm
If you are a sole trader you cannot in general claim these, the exception is you are away from home overnight when you may be able to claim a reasonable dinner and breakfast.
Main travel expense costs that may be allowable are:
- Train fares
- Hotel accommodation
- Public transport
- Alcohol, unless in moderation with a meal
Examples of other travel expenses which would not be considered as allowable include:-
- Babysitter costs
- Christmas/Office decorations
- General groceries
- Kennel fees
- Personal charges on hotel bills e.g. in room videos
- Toiletry items
It is essential that if you aren’t sure about the treatment of an travel expense item that you request clarification from your accountant.