5 Tax Deductible Tax Expenses for Self Employed
Do you have to travel for your job? If that’s the case, make sure you know what types of travel costs are tax-deductible and what you can’t.
The most important regulation is that you cannot travel to your usual place of business. You cannot claim travel costs if you travel to your own office or if you always work at one customer site. You should be allowed to deduct reasonable travel expenditures from your business income if you go to other places.
The following are the top five tax-deductible travel costs for self-employed people:
Tickets! Any aircraft, rail, or bus tickets purchased solely for business purposes are tax-deductible.
Other related travel expenditures are also acceptable – for example, taxis, parking, and tube travel (though if you have an Oyster card that you also use for personal travel, you may only claim if you have to pay more to travel to a different zone) – acquire and maintain receipts for wherever feasible. Expenses or miles are two terms used to describe how much money you spend on your You can either deduct real driving expenditures or mileage as a lone trader if you use your automobile for work trips (if your turnover was below the VAT threshold when you bought the car). You should keep track of your business mileage in any case. If you want to deduct mileage, tally up all of your business miles – and make sure you have a record of the business journeys to back up your claim – and then calculate your deduction at 45p per mile for the first 10,000 miles and 25p per mile beyond that. If you take actual motoring expenses, you must keep track of all your motoring costs, including gasoline, insurance, road tax, MOT, and repairs, and calculate your business use proportion – for example, if you drive 9,000 miles a year, but only 3,000 are for business, deduct 1/3 of your motoring expenses from your business profits. For additional information on automobile expenditures, see here.
The cost of staying at a hotel for the night.
A few things to keep in mind: if you’re going on vacation and happen to have a business meeting while you’re gone, you won’t be able to claim for the vacation itself; however, you might be able to claim for an extra night if you have to extend your vacation to attend the meeting. If you’re travelling on a business trip and decide to bring your family along, your expenses should be tax-deductible, but not your family’s (unless your spouse is also involved in the business, and then their costs maybe).
Sufficient funds – but only if an overnight stay is required. Many self-employed persons believe that claiming lunch, coffee, and other expenses for a day-long work trip is acceptable, but this is not the case (although the rules are different if you are a limited company director). Only acceptable meal expenditures may be claimed if you stay overnight, and then usually only supper and breakfast; lunch is still not tax-deductible.
If you’re unsure, keep track of your spending, save your receipts, and consult accountant when you return.
Please note that everything of the foregoing relates to single traders, and the regulations for limited company directors are slightly different!
