One of the most frequently asked questions from a sole trader is in relation to travel expenses and what can be claimed against the business.

The general rule is that the cost of business travel is an allowable cost.  The question then is what is business travel?

This will depend on how you work and where your base of operation is.

Commuting is not business travel and therefore cannot be claimed. So, if you go the same place every day to work, such as an office or clinic, then that is commuting.  If you do work from home, but also have another regular and predictable place of business, then travel to that place is deemed commuting. eg a hairdresser may see some clients at home but also work in the same salon twice a week.  If you store equipment in a depot and go there to pick it up before working elsewhere, travel to the depot is also deemed commuting.

It is important therefore to determine where you base of operation is as mistakes can be costly.   Everyone’s situation will be different but where you keep your files and accounting records, where you do your admin, keep your tools, where you source new work would all be contributing factors.

What about my daily dose of caffeine in the local coffee shop while I work?

HMRC’s view is that refreshments purchased away from the normal place of business are not an allowable cost of running the business – as they have a dual purpose (you must eat to live!)

Note this is different to the treatment of employees subsistence and for limited companies.

The only time when you will be able to claim these is when occasional business journeys are made outside the normal pattern of work (eg you live and work in London but you go to Birmingham for the day to an exhibition) or where your work is of an “itinerant nature” – so you are constantly on the road.

If your trip requires you to stay away from home overnight, then hotel and reasonable subsistence costs are allowable.

So if you are meeting clients in coffee shops, rather than home, then all those coffees and cakes are not going to be an allowable cost to the business.  You maybe surprised by this – as a couple of coffee’s is cheaper than renting a meeting room – but those are the rules!

For more information please contact Rosie Forsyth at Wilkins & Co.