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Travel expenses for sole traders

For many sole traders, travel is one of the main expenses involved in running a business.

Whether you’re making frequent journeys to complete day-to-day work or just taking the occasional business trip, the costs can add up significantly over time.

You can claim the costs of travel as business expenses as long as those costs come under certain categories. It’s important to be careful about this, as over-claiming can result in heavy penalties.

Don’t let this put you off claiming expenses at all, though, as this would mean missing out on a benefit you’re entitled to.

As long as you clearly understand the rules surrounding travel expenses, and keep accurate records throughout the year, travel expenses can be a useful way to lower your tax bill.

Allowable expenses

The most important question when you’re working out which expenses you can claim is whether they are wholly and exclusively for the purpose of running your business.

As long as the journey you make is entirely for business purposes, you can claim expenses for travel. This includes both public transport and the costs of using your own vehicle.

It might sound straightforward, but the distinction between work and personal travel isn’t always clear. For example, you can’t claim expenses for an ordinary commute from home to work, but you may be able to if you’re travelling to different locations for temporary purposes.

The way tax rules apply in this area can vary depending on the way you work and where your ‘base of operations’ is.

In general, the following rules apply to allowable expenses.

You can claim: You cannot claim:
  • vehicle insurance
  • repairs and servicing
  • fuel
  • parking
  • hire charges
  • vehicle licence fees
  • breakdown cover
  • train, bus, air and taxi fares
  • hotel rooms
  • meals on overnight business trips
  • non-business driving or travel costs
  • fines
  • travel between home and work

Simplified expenses

You may be able to calculate your travel expenses using a flat rate for mileage instead of the actual costs of buying and running your vehicle, such as insurance, repairs, servicing and fuel. This is known as simplified expenses.

If you decide to use this method, you’ll first need to record all of your business miles for vehicles over the course of the year.

At the end of the tax year, you can then use the following flat rates to calculate your expenses:

Vehicle Flat rate per mile with simplified expenses
Cars and goods vehicles first 10,000 miles 45p
Cars and goods vehicles after 10,000 miles 25p
Motorcycles 24p

These amounts should be included in the total for your expenses in your self-assessment tax return.

You can’t claim simplified expenses for a vehicle you’ve already claimed capital allowances for, or one you’ve included as an expense when you worked out your business profits.

Get in touch

We can help work out your travel expenses ahead of the self-assessment deadline at midnight on 31 January 2019, so you can be confident you’ve claimed the right amount.

Different rules apply to limited companies, so talk to us for more information on what you can claim as a company director.

Contact us at 01628 631 056 or email tracya@knightandcompany.co.uk to talk about calculating expenses for your business.