One of the most problematic areas for expense claims relates to what company directors and employees can claim as travel and subsistence expenses. The general rule is that you can claim a deduction for expenses that have been incurred wholly, exclusively and necessarily for your business.
In order to be able to justify your claim, you should keep a record of your business mileage and any related expenses. This is so you can support any claim if this is ever queried by HMRC.
Basic Rules
Travel expenses are allowable for tax purposes if:
- You make journeys in the performance of the duties of your employment.
You make journeys from a place you have to attend in the performance of your duties. This can include trips from your office or other work location to visit a customer, or supplier, or other ‘temporary’ workplace.
Temporary Workplace
Temporary workplace is somewhere you would attend irregularly for a limited period of time. This can be tax deductible.
A workplace cannot be classified as ‘temporary’ if you attend it for a period of continuous work lasting more than 24 months in which the duties of the employment are performed to a significant extent at that workplace. HMRC considers this as 40% or more of your time at that place.
If you spend less than 40% of your time at a temporary workplace, you do not need to consider the 24 month rule.
For example:
Susan works in Preston. Her employer sends her to Bristol for 1 day a week for 26 months. She should still be able to claim for her travel expenses to Bristol even though this is for than two years. This is because less than 40% of her time is spent there.
Ordinary Commuting
Ordinary commuting is travel between your home and a permanent workplace. This is not allowable for tax purposes. This also applies to travel incurred to other places that are not significantly different to your ordinary commuting.