Running your own Limited Company: Travel Expenses

If you are a contractor working through your own limited company and are outside IR35 then life is very simple. HM Revenue and Customs rules state that expenses can be claimed provided they are wholly and exclusively for the purposes of your business. This means you can claim various valid expenses.

For travel expenses you can claim the cost of travel to and from your contracted place of work. Mileage rates are 45p per mile for the first 10,000 miles in any fiscal year and then 25p per mile thereafter. This allowance is to cover fuel and running costs of the vehicle. If you are travelling to work as a passenger in a car you are entitled to claim 5p per mile. You can also claim for parking and the congestion charges but you may not claim for parking fines or speeding fines. The cost of travel by public transport can be claimed but you must have a valid receipt. A mileage allowance can also be claimed for travel by motorcycle and bicycle at rates of 24p per mile and 20p per mile respectively.

It is important to keep receipts for your travel expenses or a record of any journeys. When claiming travel expenses it is advisable that you keep a note of the dates, reason, locations mileage, type of transport etc. Basically a record of travel will provide supporting evidence if required at a later stage.

It is advisable to hold onto your receipts because although your accountant will not need to see them, the Revenue, if they choose to investigate, can go back as far as six years.

If you are inside of IR35 travel expenses can also be claimed (depending on the circumstances of the contract).

For more information visit the main section on contractor expenses.

Friday 25th Feb 2011