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<b>Any Answers:</b> Sole Trader travel expenses. By Nichola Ross Martin

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13th Apr 2006
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A fairly innocuous sounding query about travel and the self-employed cropped up in Any Answers last week, and received a good level of response. However, one major point was overlooked.

Gavin Cotton asked: "I am employed full time and 11 months ago set up us a Sole Trader for the odd Web Design job which comes my way.

My accounts are very simple, with sales purely from my incoming design jobs and my only expenses are the 70% that I'm taking as salary. I'm due my first Self Assessment any day now, and want to know if I can claim travel expenses for visits to my clients?

I have a business account, but whenever I have made any of these journeys, I haven't paid for my fuel via the business account, but via my personal back account or cash.
Does this mean I won't be able to claim travel expenses? All very new to me, having only ever been an employee for 24 years!! Grateful for any comments."

Rachel was first of several to point out that he can claim a mileage allowance of 40p per mile for the first 10,000 miles of travel, and 25p thereafter, and all business travel can be charged against his income.. The onus being on the taxpayer to keep mileage records and then any tolls, car parking etc may also be claimed.

As Gavin's total income in the year under consideration was less than £2,000, there are no complications in claiming a mileage allowance. However Gavin should be aware that if he starts claiming mileage at fixed rates, he must continue doing so until he changes cars. He cannot change the basis of the claim from one year to the next.

What was the major point that they overlooked? Gavin is a freelance web designer, but also an employee. If his self-employed business is based at home, then jouneys to and from his normal employer to home are deemed as private and receive no tax relief, however claimed.

If the journey is a triangular one; for instance, he leaves his employers, goes to a private client, and then goes home, he may need to limit his claim. Likewise, if he is popping off to engage in self-employed work and visit clients from his employer's in his lunch hour, he may find that these visits are fully deductible.

This sort of query pops up often, as illustrated by the case of Sargent v Barnes [1978] 52 TC 335, which involved a dentist and triangular travel and Newsom v. Robinson [1952] 33 TC 45, which involved a barrister travelling between chambers and home. If Gavin does all his freelance work from one place, the question is easily answered. But if he does some of this work from home and some from his employers, then the claim may become more complicated, and even though the claim will be a small one, each journey may need to be looked at in isolation if he wants to be accurate.

This query highlights the complications inherent in current tax law as an evolutionary process. Regarding motoring expenses, it is vital to ascertain the facts before making a claim for all motoring costs.

Nichola Ross Martin

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By aayzed
07th May 2006 08:49

Salary?
I didnt read the original thead so don't know if anyone picked up on this. The original question said that his only expenses was his 70% salary. Did anyone poit out that his own salary from a self-employed business is not an expense?

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