Are you a 1 man band contracting through your own limited company? I’m sure you’ve been wondering what you can claim in relation to travel & Subsistence expenses. Well here is a summary of what you can claim.
This blog will help you to understand the rules and ensure you are claiming the most in order to maximise tax savings.
The first hurdle you need to cross is whether or not you can class the place you are working at as a ‘temporary’ place of employment. If you can, then the travel and subsistence rules go hand in hand i.e. if you can claim one you can claim the other. There needs to be an expectation at the very outset of your contract that it will not last more than 24 months. The key word here is expectation. When it is known that the length of the contract will exceed 24 months, travel and subsistence can no longer be claimed.
This will then mean your ‘home to workplace’ travel is allowable for corporation tax. Whether that be mileage at 45p per mile (for the first 10,000, 25p per mile thereafter) or train/bus etc. Then you may also claim subsistence i.e meals. This can be on a receipt basis, so what you are actually buying as long as you keep receipts and the costs are ‘reasonable’ or on a flat rate.
The flat rate basis appears to exclude one man band limited companies as it states there must be a checking system in place where another employee is responsible for checking that the expenses are in fact incurred. Obviously if there is only 1 employee (you) then this is impossible. But the legislation then goes on to state (EIM30275):
Single employee of a one man company working at a series of temporary workplaces. Claiming benchmark scale rates.
Employee maintains a diary and time sheet to confirm occasions when travelling in the performance of their duties and retains receipts in respect of subsistence costs. An independent third party performs regular monthly checks on a sample of the employees’ records to confirm that the relevant conditions for the exemption were met on each occasion. Checks are performed at random and the employee does not know in advance which journeys will be checked.
This indicates as long as you keep receipts and a diary of working schedule and get someone who Is completely independent to verify them monthly, then you can claim the flat rate. The rates themselves can be found here:
For most people I would imagine it will be £5 per day (more than 5 hours journey time).
There is lots more help and guidance in HMRC’s employment income manual.