Travel and subsistence is a very simple expense but there is a lot to say about it. We will look at this in further detail and explain when you cannot claim this expense and when you can. There are also some tricks if you are running your own business to make the travel tax deductible.
When You Can and Cannot Claim Travel and Subsistence
- If you are an employee or business owner and you have an office, the regular commute from home to office every day is not allowed to be claimed. This is due to it being your normal commute so it is seen as a personal travel expense.
- If you travel from your office to a client’s site temporarily or if you have to travel to another city to stay overnight then these types of travel are seen as business journeys. This means you are allowed to claim the expenses.
Temporary Workplace Vs. Permanent Workplace
There are many different scenarios that need to be taken into consideration when deciding on whether you can claim the expenses or not. They are mainly linked to whether they are a temporary workplace or permanent workplace. If you are an employee/self-employed and travel from home to one place or your primary office base is from home but you do have client’s you travel to regularly, the journey will only be allowable if it is from your primary workplace to your temporary workplace.
- A very simple rule to remember is that when you do travel to the temporary workplace if it has been ongoing for longer than 24 months it might be considered as a permanent workplace. If it is less than 24 months, it will be seen as a temporary workplace.
For example, if you are a self-employed contractor and have been working for a client for 6 months, it will be classed as a temporary workplace. However, if you have been working for them for 3 years and even if they are paying you to your limited company, it is still considered as a permanent workplace so you cannot claim that.
- Another rule to remember is that it has to be less than 40% of your working time. (Less than 24 months)
If you run a self-employed consulting business for 3 years but you have had a contract for 6 months which is less than 40%, this means it is still a temporary workplace. Even if it is less than 40% and you have been travelling back and forth for a client for more than 24 months, it cannot be temporary so cannot be claimed.
If you are a trainee doctor what might happen is that you will be on rotation and work at a hospital for a couple of months but perhaps you are on an essential single contract. If this is the case, your payslip will show that you are being paid differently but in reality, they are all linked to each other. As you have only been working there for a couple of months and it is less than 24 months, it is considered as a temporary workplace. If you are a qualified locum doctor and are self-employed/running a limited company, this rule will also apply to you.
Travelling to Another City and Staying Overnight
For example, if you are based in London but need to travel to Manchester and stay overnight just for work, then you are allowed to claim this. It is important to record your business journey because you will be claiming mileage and if you travel by public transport, you need to make sure you have the receipts with you.
If you do stay overnight, you are allowed to claim your food and accommodation because they are both necessary for work. When it comes to claiming food, there is another rule that needs to be taken into consideration:
- If you are working somewhere that is more than 5 miles from your normal workplace and you have to work there for more than 5 hours then you are able to claim subsistence.
There may be another scenario where entertainment and food can be claimed. This may happen if you have to go networking as part of your business. The food expenses are incurred as part of your networking to find prospects as part of your marketing. As long as you clearly state it is necessary for your business to go networking in order to meet a lot of people in order to get more business. If the food and entertainment are for your staff it will be part of your payroll costs so for your business tax purpose it is allowed as well.
How to Make Your Travel Overseas Tax Deductible
Going on holiday can be tax deductible but not if it is for personal enjoyment. However, if you are going to a location to expand your business and do some market research, or are going to find some networking events to find some potential prospects then it can be considered as a business expense.