Contractors’ Questions: Can I claim travel expenses?

Contractor’s Question: I worked as a self-employed systems designer for the 2009-10 tax year, with four different organisations as clients. Each job was contractually paid as self-employed and required me to take the train to work in an office. All four roles were short term, ranging from a few weeks to a few months.

Can I claim back the total cost of train travel for each day I worked? If I can’t, then can I at least claim back the train fare that I paid in order to attend meetings and interviews to secure the work, but before the role/contract began?

A rule of thumb for future expenses would also be helpful. What expenses, for example, are allowed if I have to stay overnight, away from home, to attend an interview/pitch, or the client site/workplace itself?

Expert’s Answer: In short, your travel to the various workplaces would be treated as temporary employment. Your travel expenses can therefore be classed as business expenses.

A place where an employee attends for the purpose of performing duties of employment for a period of less than 24 months duration is regarded as a temporary work place.

But if an employee’s home is also regarded as his business address, the place from where they run their business and they have no other ‘business premises,’ then travelling from this business address to a permanent place of work would allow them to claim travelling expenses (whereas home to a permanent workplace would not be allowed).

For a home to be regarded as a workplace, this is allowable only where the employer does not provide premises and there is no other location where the work could be done.

‘WHOLLY, EXCLUSIVELY & NECESSARILY…’

The general rule for expenses is that they must be wholly, exclusively and necessarily incurred in the performance of duties. (If you are working through your own limited , then the test is less strict - namely it has to be 'for the purposes of the trade.') So if you, the freelancer, can justify any cost you incur as a business expense, it should be claimed. Claims are looked at by HM Revenue & Customs on a case-by-case basis. Still, the most common business expenses that are allowed are as follows:

TRAVEL

- Private Car, or travel by rail, bus, ferry, taxi, etc.

ACCOMMODATION

- Hotel, Bed & Breakfast, rental of flat / house if they are the cheaper option and a permanent residence is available elsewhere.

SUBSISTENCE

- Evening meals are allowable provided there is an accommodation receipt to vouch that that there was an overnight stay. You should be looking at £15-£25 per night depending on whether the accommodation is a hotel or B & B /rental accommodation. Individual meals cannot be claimed only the subsistence allowance.

 All of the above (travel; accommodation and subsistence) must be receipted.

  PERSONAL INCIDENTAL EXPENSES

- Small amounts while away from home such as the cost of newspapers, laundry etc up to £5 per day in the UK and £10 per day overseas. No receipts are needed.

INTERVIEW EXPENSES

However, you cannot claim travelling expenses as a business expense if travelling to an interview, since they are not an expense of employment. That said, you could ask the company you interviewed with to reimburse your expenses, but whether they do or not would be at their discretion.

The expert was Alasdair McGill, managing director of Freelance World, an accountancy firm specialising in freelancers' tax affairs. 

Further Reading: More information on IT contractor travel expenses here.