Business Travel, Mileage & Subsistence for Sole Trader
Updated: Feb 20
As a Sole Trader it can be confusing what business mileage is, what you can claim and how you record it. Along with information on travel and subsistence, our helpful summary tells you the basics you need to know.
If you use your personal vehicle for business journeys, you can include the cost of the mileage incurred in your accounts, therefore saving you tax.
What is business Mileage?
Business mileage relates to any mileage incurred whilst carry out your business. It should be wholly and exclusively for the business. So, if you go shopping with friends, but pop into the bank whilst there, that mileage isn’t solely for the business and isn’t allowable.
Business mileage includes trips to the post office or courier drop off, collecting stock, attending meetings and networking events, visiting business exhibitions etc. If you are making that journey purely for business reasons, then it’s very likely it’s business mileage.
However, there are a few rules as to what is and isn’t business mileage:
· Mileage from home to a permanent place of business, say a shop or an office, is not business mileage. This is commuting and therefore not a business expense.
· Mileage from your shop or office to other locations (perhaps to buy stock, attend a meeting or provide a quote) is business mileage and can be included in your accounts.
· If you work from home, this is more than likely to be your permanent place of work. In this circumstance, your mileage to a temporary place of work, or a meeting etc is business mileage and can be included in your accounts.
What can I claim?
Cars & Vans
45p per mile for the first 10,000 miles per tax year.
25p per mile over 10,000 per tax year.
25p per mile for the first 10,000 miles per tax year.
24p per mile over 10,000 per tax year.
Sadly, HMRC does not allow Sole Traders to claim mileage for business carried out on a bicycle, which frankly, isn’t the greenest decision. However, if you use your bike for work a lot, you may be able to include some of the cost of your bike and replacement items such as tyres in your accounts. Speak to us to find out more.
How do I claim?
You must keep a record all your business mileage in order to claim it. A simple spreadsheet or notebook will do the trick. For each journey you need to record the date, number of miles, from and to locations and the purpose of your journey, ie to visit Joe Bloggs Limited or to drop off parcels to the courier.
You must also keep fuel receipts as evidence that you have purchased fuel. You don’t claim the actual value of these receipts, they simply prove that you have purchased fuel.
If you update your accounts monthly, perhaps on cloud accounting software, you may wish to enter the total value of your mileage claim each month. However, if you tend to prepare your accounts less frequently, it’s ok to bring the total of your mileage in to your accounts at the end of the year. Trust me, for you own sanity and back pocket, try to update your mileage record more regularly as it’s really easy to forget the business miles you’ve driven and miss out on tax deductible mileage.
By including the mileage figure in your accounts, you are reducing your profit and therefore reducing the tax you have to pay.
Other Travel such as bus and rail fares
As long as the travel is wholly and exclusively for the business (see above) costs incurred for bus, rail, taxi and air fares are allowable. Again, regular commuting costs aren’t allowable.
Parking, tolls and congestion charges are all allowable, but if you pick up a parking or speeding fine whilst on business, sadly it isn’t an allowable expense.
Just don’t forget to keep all the receipts for everything you purchase.
Subsistence – Food & Drink
HMRC’s rules regarding food and drink whilst travelling sadly aren’t that straight forward. However, FreeAgent, a brilliant small business accountancy software provider has helped us out. By following their steps on the flow chart below, you can see if your meals and drinks are allowable for tax. Thanks FreeAgent! Just don’t forget to keep all the receipts for everything you purchase (can you see a theme here!)
As always, the above is a general guide to mileage, travel and subsistence for Sole Traders. If you need any further information, it’s always best to check with us or your accountant first. Don’t forget we provide a FREE year-round support line to all or clients, where we will happily advise you. Find out more about our accounting packages starting from just £35 per month.