Travelling expenses are generally part and parcel of life when you run a limited company. The good news is that a lot of these costs can be paid by or claimed back from your company. Let’s take a closer look at what you can and can’t claim for when it comes to travelling expenses.
Claiming for travelling expenses
Travel expenses can only be claimed back if they have been incurred during the course of business activities. It is not possible to claim for home to work travel.
All types of business travel costs can be paid for by a limited company. This includes public transport, taxis and airfares. Always keep a record of your journeys, and maintain receipts.
Claiming mileage costs
If you use your own vehicle for business purposes, it is possible to claim back fixed mileage costs. This is done under AMAPs legislation which provides allowances that cover all fuel and vehicle running cost.
Currently, company employees can claim back 45p per mile for the first 10,000 miles, and 25p per mile after that. For motorbikes the rate is 24p per mile, and for bicycles it’s 20p per mile. Passengers in vehicles who are travelling for business purposes can claim 5p per mile.
As a limited company owner you are able to claim for the cost of parking your vehicle, congestion charges and tolls. Limited company employees can also claim for the cost of parking close to the workplace. The cost of parking tickets or fines however is not covered.
The ’24 month rule’ and travel expenses
If you are providing professional services to a client then you may travel to a ‘temporary workplace’ for a period of time. Once you have worked at this temporary workplace for 24 months, or from the moment you are aware that the assignment will last 24 months or more, you have to stop reclaiming the travelling expenses to that workplace. To further complicate matters, there is also the 40 per cent rule, which dictates that if you return to a temporary workplace that you have been to before and you spent more than 40 per cent of your time there over the past 24 months, then you cannot reclaim for the subsequent cost of travel.
Company Owned Vehicles
The advantages and disadvantages of buying a vehicle through your limited company are complex and so are the tax rules relating to company car ownership.
Making good use of the services of a professional bookkeeper will benefit you enormously as they will be able to draw maximum savings for you and ensure you are operating as efficiently as possible for tax purposes when it comes to travelling expenses for your limited company, especially with Making Tax Digital on the horizon.