Share this content

Travel to work for self employed delivery drivers

what is allowable mileage for a self employed delivery driver?

Didn't find your answer?

I'm having an interesting discussion about what mileage would be allowable for a self employed delivery driver.

Lady with a van travels to depot daily (25miles each way) loads up her parcels and delivers within the local area to the depot. Her mileage to and from the depot each day exceeding that of her delivery rounds.

I feel that the Samadain case is likely to be relevant, but I'm sure that there must have been at least one case specifically relating to courier drivers. Can anyone point me towards a relevant case or already had this conversation with HMRC?

Replies (38)

Please login or register to join the discussion.

avatar
By Tax Dragon
07th Jul 2021 11:44

Samadian, yes. Other oft-cited cases include Newsom v Robertson, Sargent v Barnes, Manders, and Horton v Young.

This last is worth attention, but, honestly, you're gonna struggle to justify the home-to-depot-and-back journeys. In fact, honestly, you won't. Because, honestly, the reason these are made is to do with life, not (wholly and exclusively) with work.

Thanks (0)
avatar
By David Ex
07th Jul 2021 11:54

https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim37605

“ The base of operations - a useful pointer in some cases

The cost of travelling from home to place of work is generally disallowed, representing as it does the (private) choice of where to live and that such is separate from the place of work. It does not matter that the taxpayer may at times work at home or keep their business records, materials, tools etc at home. Everyone needs a place to live and the journey from their place of residence to place of work is, at least in part, occasioned by the private choice of where to live. So the journey will have a dual purpose and the cost is not allowable.”

Thanks (0)
By Duggimon
07th Jul 2021 12:16

I really dislike the argument against these expenses being allowable. I don't question at all that them's the rules and all the case law backs it up, but to my mind the reason for commuting is always wholly and exclusively for work, because you can't live at your work. The amount of the expense is varied by non-work reasons, but the occurrence of the expense is purely a work related one, as there must always necessarily be a commute.

I'm just musing here really, it's not relevant to the question at hand which has already been answered, travel to the depot is commuting and disallowed per all relevant cases and the HMRC manuals on the subject, and presumably therefore by the legislation too.

Thanks (0)
Replying to Duggimon:
avatar
By Tax Dragon
07th Jul 2021 12:21

My view (I may even have said it in the thread I link in the comment below, I don't recall) is that getting to work is for work, getting home again is not. I believe in some places (USA?) it does actually work like that. [Or I might have dreamt that... https://www.accountingweb.co.uk/any-answers/tax-dragon-blues.]

Anyway, in the UK (where I live) the courts disagree with me.

Thanks (0)
Replying to Duggimon:
Stepurhan
By stepurhan
07th Jul 2021 15:39

Duggimon wrote:
The amount of the expense is varied by non-work reasons, but the occurrence of the expense is purely a work related one, as there must always necessarily be a commute.


I understand where you are coming from, but I think this is the sentence that undermines your argument (and is the main justification for commuting not being claimable).

Accepting you cannot live at the office, you can still live close to most offices. There have been houses and flats within, at most, a 5 minute walk from every office I have worked in. The reason that your commute is longer than that is that you, personally, do not want to live in the houses and flats nearby. There may be a variety of reasons for that, including not being able to afford town centre accommodation, but all of them are personal ones.

The amount your commuting costs vary depend on those personal reasons, not business ones. Since the minimum commuting cost is nil (you live close enough that walking to work is practical), anything above that must not be work related.

Thanks (1)
Replying to stepurhan:
avatar
By Tax Dragon
07th Jul 2021 15:54

That's commuting. There are defined rules for employees. (We may not always understand the definitions, but at least they exist! :-))

For the self-employed, those rules don't exist. All there is is W&E and court cases applying W&E to travel. W&E applies to the purpose, not the quantum. This thought lies behind Duggi's comment.

Now, it so happens that journeys to and from home are made, among other reasons, because home is where you live. Samadian also worked at home, but it didn't remove the duality of purpose.

(I feel like I'm repeating other comments already made on this thread. Rather than have me witter on, perhaps you could read through the rest of the thread.)

Thanks (0)
Replying to Tax Dragon:
By Duggimon
07th Jul 2021 16:40

Exactly, and I think on reflection I agree with your first reply to me. Travel to work ought to be allowable for the self employed. There is no reason for you to travel to work, other than the need to go to work. The same isn't true of your journey home.

Thanks (0)
Replying to Duggimon:
avatar
By Mr_awol
07th Jul 2021 23:18

But what’s so special about the SE that they should get tax relief on travel to work but E’ees can’t claim relief for job related expenses?

(I know TD has distinguished between the two sets of rules but let’s face it, if we’re making up rules in contravention to how we know they work for SE let’s go the whole hog)

Thanks (0)
Replying to Mr_awol:
avatar
By Tax Dragon
08th Jul 2021 07:20

FWIW (which is zilch, nada, nowt... but still I see a benefit in making the comment), I think the purpose of the journey to work is wholly and exclusively to get to work. The reason for the journey may well be (OK, is) because you live away from work.

But reason and purpose are not, to my mind, the same thing. And as s34 tests purpose, not reason, I do think there's an argument.

Or would be, if the courts hadn't already said that there isn't. (Obviously, since my thinking deviates from that laid down in court, there is something wrong with my thinking. You should all pay little regard to anything I say on this subject until I get my thinking on it straight*.)

*This last sentence is the imo beneficial part of the post.

Thanks (0)
Replying to Tax Dragon:
RLI
By lionofludesch
08th Jul 2021 07:31

Tax Dragon wrote:

FWIW (which is zilch, nada, nowt... but still I see a benefit in making the comment), I think the purpose of the journey to work is wholly and exclusively to get to work.

Surely the courts said it wasn't allowable because they're fundamentally biased in the establishment's favour, being part of the establishment.

Thanks (0)
Replying to Tax Dragon:
avatar
By The Dullard
08th Jul 2021 09:31

No this was dealt with in Newsom. The purpose of the expenditure on the morning journey is not wholly and exclusively for business purposes. He went home last night for his private needs of rest, recreation and sustenance; and now that journey home needs to be undone!

Thanks (0)
Replying to Mr_awol:
By Duggimon
08th Jul 2021 09:25

Mr_awol wrote:

But what’s so special about the SE that they should get tax relief on travel to work but E’ees can’t claim relief for job related expenses?

(I know TD has distinguished between the two sets of rules but let’s face it, if we’re making up rules in contravention to how we know they work for SE let’s go the whole hog)

That's the point though, there are no rules disallowing it for the self employed, just a history of negative interpretation, that I happen to disagree with. It's enough to scupper any claims but it's still an opinion, not a rule.

Thanks (0)
avatar
By Tax Dragon
07th Jul 2021 12:16

There's another interesting discussion to be had. Why do we apportion costs by mileage (if that's what you're doing)? Because it's easy to understand, easy to track and generally fair. It's what HMRC expects and it's what everyone does. It's so traditional, we do it without thinking.

But it's not statutory.

Ignoring some woeful maths (mea culpa) toward the end of this thread, this might challenge your preconceptions: https://www.accountingweb.co.uk/any-answers/reasonable-personal-use-of-b...

Thanks (1)
Replying to Tax Dragon:
avatar
By Hugo Fair
07th Jul 2021 13:06

Indeed, you can use any methodology/basis for your calculation ... so long as you're prepared to explain it and justify it to HMRC if requested to do so.

And the most obvious basis (in OP's situation) would be a time-driven set of calcs ... since the wear and tear, fuel consumption and (arguably even) insurance are 'consumed' far more during time-elapsed start/stop driving than anything to do with mileage - although some costs (such as road-tax) aren't really related to any variable.

I was about to start trying to define some of the parameters, when I realised it might be hard for an individual job/driver but almost infinitely difficult to then genericise it. But that's no reason for OP not to give it a go (now that I know you like your double negatives) ... and could result in an interesting conversation with HMRC if they ever wanted to discuss it.

Thanks (1)
Replying to Hugo Fair:
avatar
By Tax Dragon
07th Jul 2021 14:18

The only generic answer is mileage. (And that's generic only by custom.)

I think it was Awol (how sad if I've remembered that correctly!!) on the other thread pointed out tyre wear and tear might be mileage linked whilst engine wear and tear might be time linked (or some similar point).

I think if you go to time-apportionment then you need to accept that tax, insurance etc apply 24/7. Which might actually make you worse off than using mileage.

The biggy is fuel. Unless it's electric [and maybe even then], you're using much more on the middle 25 miles than you are on the 25 miles either side of that.

These complications may explain why everyone defaults to mileage. But it does seem unfair (and unhugolike generally) for cases like that in the OP.

Thanks (1)
Replying to Tax Dragon:
avatar
By Hugo Fair
07th Jul 2021 15:00

"I think if you go to time-apportionment then you need to accept that tax, insurance etc apply 24/7. Which might actually make you worse off than using mileage."

Whilst I understand your point, I'm not sure that I agree where (as here) we're talking about a "Lady with a van" - which I take it to mean that the van is hers.
Were it a company vehicle then, as a BiK, it's likely to remain 'available' 24/7 ... and your point would come into effect if you were allowed to pro-rata the BiK (which you're not - other than in terms of whole days of 'unavailability').

But I'm not aware of any similar constraint upon the taxpayer's calculation of 'allowable' costs where the vehicle is not a company-owned one. So why (a real not rhetorical question) could OP not use a time-based apportionment of the costs incurred during the periods of vehicle use? Basically, bar a few costs like road-tax, there are no costs when it's not in use - so it's not always a 24/7 issue.

Thanks (1)
Replying to Hugo Fair:
avatar
By Tax Dragon
07th Jul 2021 15:25

Hugo Fair wrote:

Basically, bar a few costs like road-tax, there are no costs when it's not in use - so it's not always a 24/7 issue.

Yeah, my "etc" (

Tax Dragon wrote:

I think if you go to time-apportionment then you need to accept that tax, insurance etc apply 24/7.

) is fairly limited. Possibly nothing more than the MOT.

Thanks (0)
Replying to Tax Dragon:
RLI
By lionofludesch
08th Jul 2021 06:57

Tax Dragon wrote:

There's another interesting discussion to be had. Why do we apportion costs by mileage (if that's what you're doing)? Because it's easy to understand, easy to track and generally fair. It's what HMRC expects and it's what everyone does. It's so traditional, we do it without thinking.

But it's not statutory.

Ignoring some woeful maths (mea culpa) toward the end of this thread, this might challenge your preconceptions: https://www.accountingweb.co.uk/any-answers/reasonable-personal-use-of-b...

I can't remember the last time any personal use add-back was challenged by HMRC. Must be the 1980s. The reasons for it are that the client will have a lot more facts than HMRC and that the tax at stake is usually buttons.

It user to be a bit of a face saver for Inspectors. Justified picking the case out for enquiry. "Ha - I've spent three months on this but I've got £50 out of it."

Thanks (0)
avatar
By frankfx
07th Jul 2021 13:28

When you explain the rules to your client, make sure that you are prepared for the counter argument.

"But but but..All the other drivers claim the cost to and from depot"

Your client unlikely to distinguish between those operating through limited company, and self employed.

Q more time to explain.

If her delivery round is say 25 miles.

Then she will only get a third of costs allowed.
25/75.

https://community.hmrc.gov.uk/forums/customerforums/expenses/2c7084b3-39...

The above is so light on the actuality.

Digging deeper

https://www.gov.uk/expenses-if-youre-self-employed/travel

So what?

But no example provided!

Therefore over to you the professional messenger!

Later..

Please don't shoot the messenger.

Let us know if client appoints another accountant, or decides to DIY self assessment.

Thanks (0)
By ireallyshouldknowthisbut
07th Jul 2021 13:40

Quite frankly she is probably a disguised employee albeit not her problem, along with most drivers in the country.

it seems this is HMRC's target with Making Tax Difficult, rather thran regular sole traders. Shame they don't just gun for them direct given there are only a handful of parcel delivery firms.

Thanks (0)
avatar
By The Dullard
07th Jul 2021 16:08

Powell v Jackman is pretty much on all fours, save that Mr Powell delivered bottles of milk and other groceries, rather than parcels.

https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim37635

Samadian was poorly decided, based on the higher past precedents. It got to the right decision, but not for the right reasons, with the effect that tribunals are now following faulty logic.

Thanks (1)
Replying to The Dullard:
avatar
By Tax Dragon
07th Jul 2021 16:20

Reading HMRC's take on that case it seems more supportive of stepurhan than I was above.

Thanks (0)
avatar
By The Dullard
07th Jul 2021 16:04

On the wholly and exclusively point, the legislation says that where there is an identifiable proportion of an expense that is incurred wholly and exclusively you can get a deduction for that identifiable proportion.

So, the first step is to identify a proportion. Whilst there are some flat costs of a motor vehicle, they are all incurred for the purposes of use the motor vehicle and I don't see how identifying a proportion in relation to when the vehicle is not being used (and so the expense apportioned is not incurred wholly and exclusively for business purposes, which is the only allowable bit) is either appropriate or to the benefit of the taxpayer.

Thanks (0)
Replying to The Dullard:
avatar
By Tax Dragon
07th Jul 2021 16:19

Not beneficial, obvs. Why (on principle) not appropriate?

Eg my car is insured 24/7. When it was broken into (thankfully, I wasn't using it at the time) I was glad of the cover.

IIRC from the other thread, there is separate insurance to do with the carriage of goods. The cost of that cover... yes, inappropriate. (You'd have one policy cover both so it's some and some.)

Thanks (0)
Replying to Tax Dragon:
avatar
By Tax Dragon
08th Jul 2021 07:26

My neighbour's car was towed away last night because he'd paid tax and MOT only for the hours of 8 till 18.

Thanks (1)
Replying to Tax Dragon:
avatar
By The Dullard
08th Jul 2021 09:28

It is legal to have a car on the public highway without MOT or insurance. You just can't legally drive it with those things.

You need to have car tax just to have it parked on the public highway, that is true. Not everybody leaves their car on the public highway when it's not being driven though. I know I don't.

However, the purpose of all the expenditure is so that the car can be driven. And so the appropriate way to apportion the expenditure between purposes is on the basis of how much it is driven for each purpose.

While the car is not being driven, the expenditure serves no real purpose other than an (immeasurable) compliance with the law while it is parked on the public highway; a thing only done for the purpose of using the vehicle.

Pretty sure that the apportionment leg of s 34 has been tested in the Courts or by the Commissioners in a case involving expenditure on a motor vehicle.

Thanks (0)
Replying to The Dullard:
avatar
By Tax Dragon
08th Jul 2021 13:30

The Dullard wrote:

And so the appropriate way to apportion the expenditure between purposes is on the basis of how much it is driven for each purpose.

Sounds like a decent justification for basing the apportionment on mileage.

Thanks (0)
Replying to Tax Dragon:
avatar
By Hugo Fair
08th Jul 2021 14:25

Just when I thought it was safe to venture out again ...

"And so the appropriate way to apportion the expenditure between purposes is on the basis of how much it is driven for each purpose."
But couldn't "how much" be measured either by distance or by time?

The only distinction I can see is that the 'mileage' option has a value that HMRC won't query (although you are entitled to use a different value if you're prepared to justify it) ... whereas the 'time' option will always require you to justify your calcs.

Thanks (1)
Replying to Hugo Fair:
avatar
By The Dullard
08th Jul 2021 15:29

Hugo Fair wrote:

But couldn't "how much" be measured either by distance or by time?

Well somethings like brake pads, tyres, etc, it is clearly down to mileage. Others like insurance, tax, MOT (certificate but not repairs), time may be justified.

But...

it seems more likely that more of the business driving will be fast driving (less time for the miles) and more of the private driving will be slow urban driving (more time for the miles), which means you're getting a worse result, or that mileage and time will give similar results anyway.

And...

now you're p1551ng about with two calculations for what will probably be a minimal saving in terms of tax.

Thanks (0)
Replying to The Dullard:
avatar
By Hugo Fair
08th Jul 2021 17:01

I'm no car engineer/mechanic but might quibble that "brake pads (are) clearly down to mileage" ... I'd have thought that occasional use of braking during a motorway journey would wear the pads less than town deliveries (with constant traffic-lights, road-junctions and individual drop-offs)?

However I agree with your final conclusion (regarding the poor return on effort) ... which is why, in what feels like an eon ago, I said that a bespoke calc "could result in an interesting conversation with HMRC if they ever wanted to discuss it".
My way of hinting that it might be a 'fun' intellectual exercise, but not a profitable thing to spend your time on.

Thanks (1)
Replying to The Dullard:
Kitten
By Hazel Accounts
09th Jul 2021 12:56

"It is legal to have a car on the public highway without MOT or insurance. You just can't legally drive it with those things."

No it isn't legal to park on a road without insurance. All vehicles must have insurance unless they have a SORN (statutory off road notification) and then they must not be on a public highway! This changed around 10 years ago I think.

https://www.gov.uk/vehicle-insurance/uninsured-vehicles

Thanks (0)
Replying to Tax Dragon:
By Duggimon
08th Jul 2021 09:28

I park in my driveway and the office car park so my car only has to be taxed for 2 hours a day, yet here I am paying 12 times as much as I should like a mug.

Thanks (0)
Replying to Duggimon:
avatar
By Tax Dragon
08th Jul 2021 13:26

I guess you don't live next door to me.

Thanks (0)
avatar
By john hextall
09th Jul 2021 10:55

If she is self-employed, isn't her place of work her home (office)? And therefore all the travel should be allowable?

Thanks (0)
Replying to john hextall:
avatar
By Tax Dragon
09th Jul 2021 11:08

"Should be"? Is that a moral judgment?

The statutory test translates to whether a journey is made wholly and exclusively for business purposes. The courts have decided that journeys to and from home in situations nigh on identical to the client's here were not so made.

You might learn something from reading some of the responses already made.

Thanks (0)
Replying to john hextall:
avatar
By The Dullard
09th Jul 2021 13:52

Do you imagine she drives around her living room delivering parcels John?

Thanks (0)
By Nebs
09th Jul 2021 17:07

My guess is that, in the same way that mortgage interest is no longer allowable against rental income, some time before 2030 (when we can only buy electric cars) all motoring expenses for petrol and diesel vehicles will not be allowable against business profits.

Thanks (0)
Replying to Nebs:
RLI
By lionofludesch
09th Jul 2021 17:13

Nebs wrote:

My guess is that, in the same way that mortgage interest is no longer allowable against rental income, some time before 2030 (when we can only buy electric cars) all motoring expenses for petrol and diesel vehicles will not be allowable against business profits.

You don't think that the can might be kicked down the road ?

Bearing in mind that we seem to be attempting to outrun technology ....

Thanks (0)
Share this content