Travel and Subsistence expenses that can be deducted from net taxable profit as tax allowances for car mileage rates, meal allowances and travel and subsistence allowance expenses. Subsistence allowance expenses broadly include additional travel expenses necessarily incurred but not fares or car allowances for example.
The cost of a business journey and meal cost is a claimable travel expense from one workplace to another including travelling between your main permanent workplace and a temporary workplace or travel to or from a certain workplace because the job demands it. Business journeys do not include ordinary commuting, home to a permanent workplace or private journeys which are not travel expenses.
You can claim travel and subsistence costs on the necessary costs of business journeys like public transport fares, car allowances, hotel accommodation, lodging allowances, meal receipts, tolls, congestion charges, parking fees and business phone calls. You cannot claim meal allowance or travel allowances for costs not directly related to the business journey. A daily meal allowance for a non business partner in the travel expenses cannot be claimed.
The entertainment expenses in travel and entertainment costs are not tax deductible travel and subsistence expenses. Entertainment expenses would be allowable expenses if for advertising and promotional purposes as genuine business expenses but not as a subsistence expense.
Car Mileage Allowances Tax Allowances
When an employee uses their own car, van, motorbike or cycle to make business journeys the employer normally pays car mileage rates payments to cover the travel expenses which are tax allowances. Provided the car allowances paid is below the maximum amount per mile travel and subsistence costs are not taxable. If your employer doesn’t pay you the maximum, you are entitled to tax relief on the difference between what your employer actually pays you for your business journeys and the maximum tax free amount that your employer could have paid you for those journeys
Maintain accurate records of the dates, mileage and details of all work journeys incurring business mileage and the car mileage allowances payments your employer gives you. You cannot get relief for your actual expenses if they are greater than the allowed Inland Revenue mileage rate maximum per mile. The Inland Revenue mileage rate is currently 45 pence per mile for the first 10,000 miles and 25 pence per mile thereafter in each financial tax year (2011/12). The 45 pence per mile car mileage rates is increased to 50 pence if another employee travels in the same vehicle on the business journey. The Inland Revenue mileage rate when using a bicycle is 20 pence per mile which is recorded the same way as the car allowances.
You may be able to get tax relief for business mileage when you use your own vehicle on business, or for fuel you buy when you use a company car. You can go back several years to get the relief depending on whether you have previously sent in a self assessment tax return.
As an employee you are entitled to vehicle mileage allowances if the employer pays less than the approved Inland Revenue mileage allowance rate. If your employer pays you more than the approved mileage rate, the excess is taxable. .The same rule on this car mileage rate travel expense tax allowance is also applicable to self employed business expenses.
Tax relief for fuel when using a company vehicle
If you pay for fuel when using a company vehicle for business travel you can get tax relief on fuel costs, less any payments repaid by your employer and covered by a dispensation as an alternative to car mileage rates. You must keep a record of your business mileage to calculate your expenses. Where relief for business travel is given at statutory mileage allowance relief rates and not for actual costs this does not prevent relief for subsistence and accommodation costs. Mileage allowance relief applies to the costs of using the employees own vehicle and does not prevent relief for additional costs attributable to business travel that are not costs of using that vehicle.
Travel and Subsistence Allowance Expenses
Travel expenses include the actual travel expenses, meal allowance, subsistence expenses and associated costs incurred as part of the cost of making the business journey. The cost of business travel includes the cost of any necessary subsistence costs incurred in the course of the journey and the cost of meals necessarily purchased whilst at a temporary workplace. Meal cost should be supported by the meal receipt to avoid problems claiming the tax allowances. Daily allowances or per diem allowance can be claimed if approved as an Inland Revenue rate
If an overnight stay is needed then the cost of the accommodation and any necessary meals is part of the cost of business travel. If the overnight stay is in a hotel, claim the hotel bill including the meal cost, or claim the lodging allowance of £38.24 (£31.85 outside M25) if the overnight stay was with family or friends, in effect daily allowances.
Subsistence expenses must be attributable to the business travel and incurred in the course of the journey being additional to costs if it were not for the business travel. Consequential costs not incurred in travelling but due to circumstances, for example the cost of a child minder while away from home is not an allowable travel expense. Subsistence costs do not need to take into account the costs saved as a result of the business travel. For example, if a meal cost is claimed as part of the travel expenses no deduction is required for the cost of that meal at home enabling the full meal cost to be the meal allowance.