Contractor Travel Expenses
Short guide for UK limited company contractors and freelancers, operating outside of IR35 rules. It also assumes the directors and shareholders are full-time UK residents, running their businesses from the UK.
24 Month Travel Rule
If you are travelling to a client site as part of your contract that lasts for less than 24 months and it is not simply your ordinary commute, then you can claim travel expenses.
If you break the 24 month rule you may still be able to claim some of your travel costs. If the location represents less than 40% of your overall business working time it remains a temporary workplace. Review the previous 24 months on a rolling basis to see if the 40% rule has been breached and you have to stop claiming as soon as it's exceeded. Continue to monitor the rolling 24 months situation month by month and if you drop below 40% you can start claiming your travel again.
Business Travel Expenses
Claims for travel can include public transport and taxis where public transport is not available, but should not be excessive. In all circumstances tickets / receipts are required.
Where contractors use their own vehicles for business travel - Car, motorbike or cycle in addition to a mileage allowance you can also claim for - parking, toll fees and congestion charges. (But not parking or speeding fines).
|2017/2018 Tax Year||First 10,000 miles||Miles in excess of 10,000|
|Car||45 pence per mile||25 pence per mile|
|Motorbike||24 pence per mile||24 pence per mile|
|Cycle||20 pence per mile||20 pence per mile|
Subsistence / Meal Allowance
If you travel to a temporary location for work, then you may be able to claim the cost of the lunch which may take the form of a pre-packed sandwich, a meal in a canteen or cafe and can include a non-alcoholic drink.
If you stay away from home overnight for work then you can claim an evening meal and breakfast which must be reasonably priced and not to a standard above what you would normally have. Additionally, you can claim a flat-rate un-receipted personal incidental expenses allowance of £5 per night in the UK or £10 overseas.
Hotels, guesthouses and B&B’s for work can be claimed as an expense as well as reasonable cost of meals taken in conjunction with overnight accommodation. There is no set rate for accommodation but it must be considered as reasonable.
(There are a few situations where accommodation expenses may be considered as non-allowable - where an employee is accompanied by their family, the choice of location is not work related or where the standard of accommodation is unreasonably high).
Holidays & Overseas Travel
HMRC look very closely at overseas travel so ensure you have a clear business case for the trip and document all costs carefully. If you combine a personal holiday with a business trip this would be treated as a benefit-in-kind and you would be personally taxable. If the main reason for the trip was unquestionably a business, it may be possible to claim the business only content of the trip. If you take your family with you this is will probably be considered by HMRC as personal, not business travel.
Remember tax law and HMRC guidelines on expenses change on a regular basis so…. If you have any doubts or questions please contact Beans on 020 8123 1987 or email info@SmartContractorAccountants.co.uk
Disclaimer: The information provided in this guide is of a general nature. It is not a substitute for specific advice for you own personal circumstances. You are recommended to obtain specific professional advice from a professional accountant before you take any action or refrain from action. We endeavour to use reasonable efforts to furnish accurate, complete, reliable, error free and up-to-date information, we do not warrant that it is such. We and our associates disclaim all warranties. The information can only provide an overview of the regulations in force at the date of publication, and no action should be taken without consulting the detailed legislation or seeking professional advice.
Contractor Expenses Guides
- Travel & Accommodation
- Home Working
- Accountancy Fees
- Use of Home as Office
- Internet / Broadband
- Phone Costs
- Computer Costs
- Training Costs
- Childcare Costs
- Pre-Trading Costs
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