Travel and subsistence – some basics

Paula Veysey Smith • 23 April 2018

Travel and subsistence – some basics

Our third Thorny Issue article will look at travel and subsistence. These rules do vary depending on whether you are self-employed, employed or a company director. However, there is one thing in common, any expenses must be wholly and exclusively business related. This applies all the way through. Combined business and personal travel or subsistence expenses are not allowed. You must always deduct any non-business element.

For the purposes of this article we will focus on the self-employed and company directors.

You can claim for travel and subsistence when:

Travel for work outside the normal commute
Food and drink during the day on journeys outside the normal pattern of work
Overnight accommodation on work journeys
Dinner and breakfast when staying overnight

However, it cannot be claimed when:

Normal commute to and from base of work
Food and drink on journeys as part of the normal pattern of work
Parking fines, speeding tickets and other penalties
Travel costs not exclusively for work

Where is my usual place of work?

The first thing you need to think about is your base of work, so that you can work out what is your ordinary commute. If you rent working space anywhere then it is generally straightforward as that will be your base of work. If you mainly work from home then that will usually be your base. If you don’t rent space and are generally out and about e.g. a plumber, then your base might also be home. This is particularly true if you are claiming use of home as an office as part of your expenses.

You can’t include any expenses for your journey between your home and base of work as this is considered to be part of your ordinary commute. Other travel outside the ordinary commute is generally allowed provided it is “wholly and exclusively” for work purposes. Using a private car the best way to reclaim your cost of travel is by pence per mile and you can also claim other travel expenses such as airfares, rail, taxis, bus, congestion charge, toll charges. If you drive a van, eg, a plumber again, the whole cost of your vehicle can be reclaimed as a company vehicle.

You can’t claim for penalties and fines, so no speeding or dodgy parking. You also can’t claim for Oyster card top-ups if you also use the card for personal travel. Although it sounds picky why not have two cards. You can also use debit and credit cards so it makes it even easier to put the journey on either your personal or business bank account.

What meals can I claim?

“Everyone must eat to live” says the tax office, which means that in general you can’t include your day to day meals as a business expense. However, there is recognition that meals while out and about traveling can end up costing more. The question then becomes is the journey one that you make infrequently and outside your normal pattern of work?

If the travel is part of your normal pattern of work then you can’t have any meals during the day e.g. a plumber travels and works out and about at various client sites. The travel costs are allowable but the subsistence is not because it is part of the normal work pattern. This also applies to contractors who mainly work in the same office. For example, a contractor who works in London can’t claim lunch or coffee expenses as the office would be deemed their place of work and such expenses would be within a normal pattern of work.

If the journey is more of a one-off and not part of the normal work pattern then you can include meal expenses during the day e.g. an architect working from home can include both travel and meals costs for a whole day out at a conference.

Staying away

If your business requires a trip with an overnight stay then you can claim for the cost of the accommodation and reasonable expenses for the evening meal and breakfast.

However, beware – anything claimed for locations too close to your base of work might not be considered to be subsistence and also bear in mind that the HMRC guidance says reasonable costs. So the Michelin star restaurant may be out of bounds while away on a business trip. Also alcohol is not subsistence unless it is purchased with a meal and even then it must be reasonable e.g. one drink or half a bottle of wine.

These rules really apply for both the self-employed and Company Directors. It is important that Company Directors only claim back the actual cost or they may find that their reimbursable expenses should be reported via the P11D. This extra level of reporting is overcome by paying for expenses directly from the business either by debit or credit card.

Recently, further rules have been brought in to further clamp down on what travel and subsistence can, and can’t be claimed. If you do have any specific questions please do contact us to discuss further.

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Working from Home Expenses You Can Claim in 2025–26

by Paula Veysey-Smith • 22 May 2025

Do you work from home? If you do, either full-time or part-time, you may be eligible to claim certain expenses either against your own taxes or your Limited Company ones. Many factors will determine what you can claim such as working location, employment status (employee, self-employed, company director), and how much of your home is used for work. What can I claim as an employee of a company? You can claim: A flat-rate allowance of £6 per week (or £26 per month) without needing to provide evidence of expenses. This is the simplest method and can be claimed via your tax code or tax return. The actual costs (if you don't use the flat rate) which can include a proportion of the following: Heating and electricity Internet and phone bills Water (if it’s metered and usage is clearly work-related) You cannot claim rent or mortgage interest unless you're self-employed. These expenses can be claimed via HMRC’s online portal if they have not already been reimbursed by your employer! What can I claim if self-employed (sole trader or via a Partnership)? Here you have two options: 1. Simplified Expenses (Flat Rate) Based on hours you work from home each month: 25–50 hours/month → £10/month 51–100 hours/month → £18/month 101+ hours/month → £26/month 2. Actual Expenses Method You can claim a proportion of: Rent or mortgage interest (not capital repayments) Utilities (gas, electricity, water) Council tax Internet and phone Cleaning and maintenance Home insurance (if work-related) You’ll need to work out the percentage of your home used for business, usually by the number of rooms (not including bathrooms, corridors, storage space) or square footage. One word of warning is never claim the whole use of a room for business as every room will have duality in use. This is also important if you own your home as a room declared purely an office could attract Capital Gains Tax when the property is sold. We suggest that any room should only be claimed at 90% for business. And only one room can be used, not a multiple! These costs should be included on your Self-Assessment tax return. Can I make a claim for these expenses in my Limited Company? Yes, you most certainly can. At MPower Accounting we not only recommend using the actual expenses method as set out above, we provide our clients with a bespoke spreadsheet to calculate these expenses, and others such as mileage, on a month-by-month basis. These amounts can then be claimed as expenses to the Company and paid out to you. It is one of the tax efficient methods of taking money from your business. Capturing and calculating monthly your regular working from home expenses is the best way of ensuring they are recorded correctly. To help you do this we are offering a free download of the spreadsheet usually only available to our clients; please use the link below to get this. Paying taxes is a necessary evil but I am a firm believer in minimising this liability for both individuals and companies. Correctly claiming working at home expenses is one way to reduce your tax bill. Please do contact us if we can help you further identifying all the expenses you can claim and also for further assistance in how to correctly use and populate the downloaded template.

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by Paula Veysey-Smith • 28 April 2025

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How will I be affected by Making Tax Digital for Income Tax (MTD for ITSA)?

by Paula Veysey-Smith • 23 March 2025

HMRC are starting to send out letters to sole traders and landlords in the initial steps towards Making Tax Digital for Income Tax. If you receive one of these letters do not panic, help is at hand. So let’s answer your most asked questions about Making Tax Digital. What is Making Tax Digital for Income Tax? Making Tax Digital for Income Tax (MTD for ITSA) is a UK government initiative aimed at modernising the tax system. It will require individuals and businesses to keep digital records and submit tax information to HMRC using compatible software. It is part of a broader initiative to digitalise tax returns and follows on from the changes already implemented for VAT reporting. Will Making Tax Digital affect me? MTD for ITSA will affect individuals who: Are self-employed (e.g. sole traders) and/or landlords (earning income from property). Have a total income over £50,000 per year (combined from self-employment and property). Are currently required to complete a Self-Assessment tax return. From April 2026 , MTD for ITSA will be mandatory for those earning over £50,000. From April 2027 , this threshold will reduce to £30,000. What will I have to do if my earnings are over the threshold? You will need to keep digital records for income and expenses which will mean using MTD compatible software. This will be a major change for those of you still keeping paper records. Instead of submitting an annual self-assessment return you will need to submit quarterly updates 4 times a year to HMRC. At the end of the tax year an End of Period Statement (EPOS) and a Final Declaration will need to be submitted which essentially replaces the current Self-assessment return. All of these will be required digitally, paper records and manual calculations will no longer be accepted. This means that instead of 1 annual return you will need to make 6 submissions! So what software do I need to use to keep digital records? Acceptable software include: QuickBooks Xero FreeAgent Sage or, HMRC-recognised spreadsheet tools with bridging software ( not highly recommended ) No more shoeboxes of receipts or manual books — everything must be digitally recorded. When will I need to register for MTD? You’ll need to sign up for MTD for ITSA before April 2026 . This is a deadline and not a target, signing up early is always advisable. HMRC will provide a service for you to do this but having the guiding hand of an accountant will make this a much easier task.

Travel and subsistence – some basics