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Travel expenses – when are they tax-allowable?

Here we summarise the regulations around when taxpayers may claim travel expenses against tax and when they are not entitled to do so.

The basic principle is that you can claim for travel expenses which relate to travel for business purposes and not for travel undertaken for private, personal reasons.

What travel you cannot claim against tax

Consequently, you cannot claim against tax travel costs relating to:-

  • travel undertaken for purely private reasons
  • the part of combined business and personal travel which relates to the latter purpose, provided that this is specifically identifiable
  • travel between your home and your usual workplace (generally regarded as private travel) and
  • travel between your home and the workplace where you work for an employer, even if you also run your own (self-employed) business from your home.

What travel you can claim against tax

However, you can claim in respect of:-

  • travel between your usual workplace and other places of work, such as a school, a pupil’s home or a concert venue
  • travel between two other places of work, for example different schools and
  • business travel between your home and a workplace which is not your usual workplace.

What if my work is home-based?

If you are carrying on a home-based business, that is your home is your work base, you can claim the cost of business-related trips between your home and other places.

This means you can claim the cost of travel from your home to:-

  • a place where you will be performing or teaching and
  • a place where you will be carrying out other business-related activities, such as purchasing equipment, doing business banking, mailing invoices, consulting your tax adviser on a business issue.

The important caveat here is that, even if it is accepted that your home is used as a place of business, HMRC will seek to disallow travel between your home and another workplace if it is considered you have a regular and predictable pattern of travel between the two.

Is my home my workbase?

You cannot count your home as your workbase unless you carry out itinerant work. HMRC tell us that the following factors may indicate that you do itinerant work:

  • travel is a fundamental part of your work, for example to get to a venue to perform or to a school or pupil’s home to teach
  • you have a 'web' of work places you travel to throughout the day, such as travelling between schools in your work for a music hub
  • you continually travel from one work site to another
  • your home is a base of operations – you start work at home and cannot complete it until you attend at your work site
  • you are often uncertain of the location of your work site.

How much can I claim?

  • for travel expenses in your car, you may claim your actual business petrol costs and the proportion of repairs, maintenance, tax, insurance and other costs which relate to your business use of your vehicle (and capital allowances in respect of the purchase of vehicles used for business purposes)
  • alternatively, you may make a standard rate claim of 45p per mile for the first 10,000 business miles and 25p per business mile thereafter.

What if I am employed?

If you are employed you may offset car travel expenses against your income, but only the difference between any travel expenses your employer has paid you and the 45p per mile allowed by HMRC, not the full 45p. For example, if your employer paid you travel expenses of 35p per mile and you travelled 1,000 business miles during the year, you would make a claim for tax-allowable expenses of 10p (= 45p - 35p) for each mile, or £100. However, the costs of your car travel between your home and your place of work are not allowable.