When it comes to the complex world of expenses, it’s crucial to understand what can be legitimately claimed to make the most of your tax deductions. For those regularly travelling for work, your travel costs could equate to substantial savings when properly managed.
Here at Carl Ford & Associates, we’ve compiled a guide to help you understand what travel expenses can be claimed. We’ll focus on three main categories: mileage, subsistence, and accommodation.
1. Mileage Claims
The cost of travel to a temporary workplace can be claimed as a business expense. This includes travel by car, van, motorcycle or bicycle. The HMRC has set ‘Approved Mileage Allowance Payments’ (AMAP) for vehicles which, as of July 2023, stand at 45p per mile for the first 10,000 miles and 25p per mile thereafter for cars and vans. For motorcycles, it’s 24p per mile, and for bicycles, it’s 20p per mile. Remember to keep detailed records of all journeys to substantiate your claims.
2. Subsistence Expenses
Subsistence refers to costs incurred for meals and refreshments during business travels. As per HMRC’s guidelines, you can claim for food and drink expenses when your work requires you to travel and be away from your regular workplace. The claim must be ‘reasonable’, meaning extravagant meals may not be fully covered.
3. Accommodation Expenses
If your business travel requires an overnight stay, accommodation expenses can be claimed. This includes the cost of the hotel room and any related expenses, such as internet charges or room service, provided they are necessary for the business trip. However, HMRC may question any luxury accommodations, so it’s advisable to stick with moderate lodging options.
4. The 24-Month Rule
In UK tax law, there is a rule called the 24-month rule which relates to travel and subsistence expenses. According to this rule, if an employee spends more than 40% of their time at a temporary workplace, and this engagement lasts or is expected to last more than 24 months, then the location is no longer considered temporary. Therefore, the expenses related to travel, accommodation and subsistence can no longer be claimed.
5. Home as a Workplace
If your home is your primary place of business, you can claim travel expenses from your home to client locations or other work-related destinations. However, travel from home to a regular, permanent workplace typically can’t be claimed as a business expense.
Understanding how to correctly claim travel expenses can save your business significant amounts of money and tax each year. It’s also important to avoid ‘over-claiming’, which could attract unnecessary attention from HMRC, something we’re sure nobody wants?!?!
At Carl Ford & Associates, we’re always available to help you navigate the tricky landscape of expenses, so you can focus on what you do best: running your business. For further advice or assistance on claiming travel expenses, don’t hesitate to contact us at hello@carlford.biz.
