There are 2 ways for the self-employed to reclaim the costs of using their own car for work – the first is to charge 45p per business mile (up to 10,000 miles) and the second is to tot up the total costs of running your car, and then allocate a percentage to the business based on business usage of your vehicle.
But which journeys can you actually claim for, especially if you work from home?
The general rules are pretty obvious.
- Commuting is not an allowable expense – so if you travel everyday to an office, then you cannot claim the costs of getting to work as a business cost.
- You can claim for business travel – so if you go from your office to see a client or perform a work task, and come back to the office – you can claim the cost of getting there and back as an expense.
But what if you do some work from home – as so many of us do?
The rules here are not so clear cut and you need to establish your “permanent place of work” or your “business base”.
If you genuinely run your business from home, then the cost of visiting clients from your home is allowable. I have an office at home, all my files are here, and I work here every day- so for me, I can claim the cost of travelling to see a client.
My client however is a marketing consultant. She does her admin at home, and an hour or so in the evening sometimes, but she generally works 2 days per week at one client and 2 days per week at another. Her permanent place of work is really at those clients, not her home, even though she is self-employed, so she should not be claiming the costs of getting from home to those 2 offices.
A good rule of thumb is that if your journey is “regular and predictable”, then it’s effectively commuting, and not allowable.
If you are an “itinerant” trader, and your base of operations is at home, then you can claim the costs of travel between home and the places you work. This is someone who travels to a number of different locations for the purely temporary purpose of completing a job there – such as a mobile hairdresser, or a plumber. The fact they go to different places every day make the costs business travel. However, if the plumber rented a separate business premises and went there first every morning to pick up tools and print out his schedule for the day, this first cost would become commuting and should not be claimed.
So you need to think about where you genuinely run your business from, and if this is not at home, then be careful about the amount of travel you are treating as allowable in your business.
For more information contact Rosie Forsyth at Wilkins & Co