For the self-employed, HMRC’s rules around driving to and from places of work are trickier than negotiating Spaghetti Junction on a dark night. But what if you factor in making a personal stop during a business journey? Let’s find out.
First up, let’s establish which journeys don’t qualify as business mileage. HMRC defines business mileage for the self-employed as journeys you make as part of your work. Travel from your home to your regular, permanent place of employment is a non-work journey, so you can’t include it in your business mileage claim.
Let’s say you drive from your home to your regular place of work, go to see a client, return to your office, then drive back home. You can’t count the first and last journeys as tax-deductible business mileage.
However, if you were to go straight to see a client from home, then go to your office, then drive home, you might be able to claim for the first two journeys. You’d have to be able to show that they’re a significantly different journey from your usual commute. Note that travel between your home and place of work outside normal hours also doesn’t qualify. You also can’t count any other private trips that you make within business mileage allowance.
The rule of thumb is that, when calculating business taxes, there are simply no deductions for expenses not incurred wholly and exclusively for work purposes. However, identifiable expenses incurred wholly and exclusively for business are valid deductions. In a situation where travel expenses relate partly to business and partly to private purposes, you would not be able to set the amount that relates to private travel against tax.
It’s worth noting that HMRC does allow some flexibility on travel. For example, you don’t need to make your business journey by the shortest route in terms of the number of miles.If another route is more appropriate – for example, you might want to avoid the M25 during rush hour – then HMRC will look upon that favourably. Permitted within the rules are short detours to find a place to eat. However, you shouldn’t abuse this flexibility: a favourite restaurant way off the beaten track where all the staff knows your name would be a no-no.
Essentially, you are entitled to claim mileage for the cost of the business element of the trip, but not the mileage for personal detours or stops. Let’s say you’re driving from Manchester to London. You leave the M40 at Oxford to pick up a grandfather clock in Abingdon that you won on eBay. Then you return to the M40 having added 20 miles to your journey.
You can claim the mileage for your intended journey. But not the extra 20 miles you added by driving to and from Abingdon. You can find current mileage rates on the HMRC website.
It’s vital that you keep an accurate record of your business mileage and all the expenses you incur so that you don’t find yourself paying too much tax at year-end. A reputable mileage-tracker app, such as MileIQ, can be a godsend. You can even switch it off for the personal element of your journeys. Now off you go to London. And don’t forget that clock.