Claiming business travel when you’re self-employed helps you to reduce your tax bill.
HMRC sets out strict rules you need to follow to work out business travel you can claim against your taxes.
Here’s how to decide what you can and can’t do when it comes to your claiming business travel expenses when you’re self-employed, as well as how to make tracking them a breeze.
How to Claim Business Travel When You’re Self-Employed
HMRC makes it clear that self-employed people cannot claim for business travel between their home and base of work.
What is Your Normal Commute?
The first step to working out how much business travel you can claim is to work out what your normal commute is.
Your normal commute depends on where your base of work is.
You may choose to work from home, rent an office or you base yourself at home but store equipment at a separate location.
The HMRC rule is:
Travel from Home to Your Base of Work is NOT a Tax Deductible Expense, but any travel you undertake be it by train, car or plane might be.
If you work from home, obviously you will not have any business travel expenses associated with commuting.
However, if you rent an office then you cannot claim the cost of travel between your home and office.
Watch out: If you store tools or equipment at a location away from your home and travel to collect your equipment on the way to work, then travel between your home and collecting your tools is NOT tax deductible.
Travel Outside of your Normal Commute
Whilst your normal commute is not a tax-deductible expense, travel outside of this often can be claimed. However, HMRC
Once you have worked established what your normal commute is, the next questions to ask yourself are:
- What was your reason for travelling?
- How often do you travel?
- Was there any private travel involved?
Establishing Your Reason for Travelling
Depending on what business you’re in, you may need to travel for different reasons – meeting new clients, working on-site or buying things you need.
In general, irregular business travel when you’re self-employed, outside of your normal commute is tax allowable.
A self-employed accountant travels from their office to meet with a potential new client at their premises. The cost of doing so would be tax deductible.
Where you have a regular contract with a customer or client, it is most likely that you cannot claim for business travel.
A self-employed content writer agrees to travel twice a week to a particular client to work from their offices on an ongoing basis. The writer would not be allowed to claim the travel in relation to this client.
Claiming Business Mileage When You’re Self-Employed
Whilst the amounts you spend on taxis, train fares and flights are easy to identify, if you use your own car for business purposes you’ll need to follow a special method to claim your tax deduction.
The same rules still apply in determining whether the journey you made in your car qualify for a tax deduction
To claim business mileage you have driven in your own car, you’ll need to record the number of round trip miles you drive from your base of work.
Then you can claim an amount as set by HMRC.
The HMRC Mileage Claim Allowance for 2018 is 45p for the first 10,000 miles of driving and 25p thereafter.
So if you travel to a client and you make a 100 mile round trip, you’ll be able to claim £45 against your taxes.
You’ll need to make sure you keep details of your journey, including when and where to support your claim.
Claiming the cost of business travel if you go away for an overnight stay is possible. You can claim for the following:
- The cost of your travel to the location;
- Accommodation for your overnight stay;
- A Reasonable amount for an evening meal and breakfast;
- You can claim for an alcoholic drink with you meal (just keep it reasonable like a glass of wine or a beer);
Read More: Claiming for Food When You’re Self-Employed
Overseas Business Travel
The costs overseas business travel can be an allowable expense but there are some HMRC rules you should keep in mind.
Don’t Mix Business with Pleasure
HMRC forbids a dual purpose trip. A dual-purpose trip is one which has a personal element to it, for example where you sight-see or take your family along.
Any personal element to overseas business travel will render your whole trip disallowable.
Whilst overseas business travel is an opportunity to travel places with your partner or family, think before you book. Otherwise, you could find yourself paying for your own business trip!
The trick is to be smart about how you book your trip. You could keep entirely separate receipts and expenses for the business side of your trip and book your family’s ticket separate to your own.
That way if the Tax Man does investigate your expense claim they wouldn’t be able to see that you took your family with you.
If you travel abroad and lose your receipts for your hotel, food and taxi travel. Or you were unable to get receipts. HMRC has rules where you can claim a set amount in respect of business travel in different countries around the world.
You can find the approved business travel rates on the HMRC website here.
Record-Keeping for Self-Employed Business Travel
You need to keep all the receipts associated with business travel when you’re self-employed.
- Keeping hold of all the receipts;
- Doing your expenses.
Automating your travel expenses claims while you are on the go will help make sure you claim everything you are entitled to and let you photograph your expenses on the move.
The Quickbooks Self-Employed app even tracks your mileage as you drive around, saving you the hassle of remembering to record your travel and log it onto a spreadsheet.
Learn More: Review of Quickbooks Self-Employed
Anita is a Chartered Accountant with over a decade of experience taking self employed business owners from financially confused to business savvy.
She is the creator of the ‘Go Self Employed’ website, which her corner on the internet where she makes self employment less terrifying.