Taxes
If you use your car for work-related travel, you probably already know you can claim a mileage deduction using HMRC’s approved mileage allowance payment rates (AMAP). But what about motorway tolls, hotel accommodation and other travel-related expenses not covered by the AMAP? Are these tax-deductible?
Here’s a look at HMRC’s rules on travel-related tax deductions, how to calculate them and how to claim them.
Which expenses does the mileage deduction cover?
First things first, let’s go over what the mileage deduction does cover.
Basically, the mileage deduction only covers the cost of running and maintaining your vehicle. These expenses include:
- Fuel, servicing (including your annual MOT) and repairs
- Car insurance
- Vehicle Excise Duty (VED)
- Depreciation (your vehicle’s reduction in value over time due to wear and tear)
Unfortunately, the mileage deduction doesn’t cover travel expenses unless connected with running or maintaining your vehicle in some way. Consequently, this means you’ll need to claim the cost of tolls and other travel-related charges separately.
Can I deduct the cost of motorway tolls from my taxes or not?
The short answer is that yes, you can - but only if you’re travelling for business-related reasons.
HMRC considers a journey to be business-related in one of two scenarios:
- It’s part of your job. For example, you’re a lorry driver who’s delivering goods to Edinburgh from a warehouse in Essex.
- You have to be somewhere other than your usual place of work temporarily. One scenario is that you’re working from a client’s office in a different city for a few days. Another, perhaps, because you’re an architect from Birmingham attending a conference in London about the latest developments in energy-efficient construction techniques.
What doesn't count as a business drive?
Unfortunately, commuting doesn’t count as a business journey. So if you work in London four days a week then travel home to Dartford for the weekend, you won’t be able to claim the Dartford Crossing toll.
In addition, HMRC will no longer consider a workplace temporary if:
- You work at the same location for more than two years
- You regularly spend more than 40 percent of a given work week there
In either of these two cases, HMRC will consider the site to be your permanent place of work. As a result, any travel to and from your home will count as commuting, which means you won’t be able to claim the cost of any tolls.
Who can claim the cost of motorway tolls?
You can deduct tolls from your tax return if:
- You’re travelling for business-related reasons.
- You’re self-employed.
- You’re employed, but you’ve paid the toll and your employer hasn’t reimbursed you.
- Your employer only reimbursed part of your expenses. In this case, you can usually claim the part your employer hasn’t covered.
Claiming toll costs: Example
Let’s say you work in payroll at an office in Warwick. Your employer sends you off to Birmingham for a conference.
Your journey takes you through the M6. Therefore you’ll have to pay a £5.90 toll on your way there and another £5.90 on your return, which totals £11.80.
Your employer reimburses you £5.
Since you drove to and from Birmingham for business purposes, you can claim tax back on the amount your employer hasn’t refunded, that is £6.80.
How do I deduct tolls from my taxes?
Your status as employed or self-employed will determine how to deduct motorway tolls. Typically, you’ll need to either fill in form P87 or complete a self-assessment tax return.
How do I deduct tolls from my taxes as an employee?
Step 1: Tot up all the business-related tolls you’ve paid during the tax year. Don’t forget to keep a record of your receipts. It’s also important to keep a mileage log as proof of your business journeys.
Step 2: If your employer has reimbursed part of your expenses, deduct that. So, if you’ve spent £100 on tolls and your employer compensates you £50, you can only claim the remaining £50.
Step 3: Add your total toll bill to any other allowable expenses (we’ll talk about these in a minute). If your total toll bill and the other costs you’ve incurred during the tax year are less than £2,500, complete a P87 form.
Step 4: If your total expenses are greater than £2,500, you’ll have to complete a self-assessment tax return.
