Travel expenses for limited company

Travel expenses for limited company are generally allowed as a business expense where all of the following conditions apply:

1. You’re responsible for paying the travel costs
2. The travel you’re undertaking is necessary for your work, i.e. your attendance at the place you’re travelling to is mandatory
3. The travel shouldn’t be ‘ordinary commuting’. HMRC defines a commute as the journey you make between your home and permanent workplace.

A permanent workplace is defined as somewhere you attend regularly, which forms a ‘base’ to work from, or where you must attend to perform certain duties. For example, if you work in the same office, nine-to-five, Monday to Friday.

However, HMRC also look for patterns in your travel. So, for example, if your work regularly involves a meeting at a specific office every Monday afternoon, this could be a ‘pattern of travel’ and mean that this mileage can’t be claimed.

To be considered a valid business trip, the journey must be from one workplace to another, for the purpose of work.

Here are some exceptions:

The 24 month rule

A workplace will be regarded as permanent if the following apply:

• You’ve spent more than 40% of your total working time at this same location

AND

• You’ve worked there continuously for 24 months

OR

• You intend to be at the workplace for more than 24 months

OR

• You work there for all, or almost all, of the period for which you were an employee or director of your limited company at a single workplace.

A workplace can be a geographical area, even if you perform work there for different clients. See more on HMRC’s guidance on the matter.

If you do have a permanent workplace, then any travel, rent and subsistence expenses for that location and journey won’t be allowable as a business expense, because the travel would be considered ordinary commuting.

The workplace becomes permanent from the moment that you show intent (by signing a contract for example) to remain there for more than 24 months. You can claim for any travel expenses for limited company to the temporary workplace up until the point of forming this intention. Remember travel expenses are available to both Directors and Employees.

Trouble recording expenses? Talk to us.