Many employees and employers find the current tax rules for dealing with travelling and subsistence claims difficult to understand. This is an area that the Office of Tax Simplification is seeking to make more comprehensible. Consequently, the treasury are consulting on possible changes to the rules, and the way that such expenses are reported. The government intends for any new rules to reflect, rather than drive, commercial decisions and that it will be responsive to 21st century working patterns. As is currently the case, any new system would not provide tax relief for private travel or ordinary commuting.
Note that unless the employer holds a dispensation from reporting such expenses, they need to be included on the employee’s or director’s end of the year Form P11d.
If the tax rules or reporting requirements change, we will get in touch to explain the implications for your business.
Following a recent case in front of the Upper Tier Tax Tribunal involving a doctor with a private practice (Dr Samadian), HMRC are applying the rules for business travel much more strictly.
The “wholly and exclusive” principle states that where there is both a business and a personal reason or benefit in meeting an expense, there is no tax relief for any of the expense. The doctor in question argued that as he was based at home (where he saw some of his patients and ran the business), the expenses of traveling to and from various hospitals and nursing homes should be an allowable business expense. Based on earlier cases, the Tribunal decided that the “habitual” journeys to two hospitals should not be allowed but less regular “itinerant” journeys to other locations would be allowed as a deduction.
Although this case involved a doctor, it has wide ranging implications for other self-employed individuals who operate their business from home and travel regularly to one or two locations. It will become increasingly important to keep a detailed mileage log of business journeys should HMRC challenge the deduction in the business accounts.
Do you still have questions regarding Taxation and Expenses? Feel Free to Phone us on 020 89310165 Now or Arrange a FREE No-Obligation Meeting with us.
Note that unless the employer holds a dispensation from reporting such expenses, they need to be included on the employee’s or director’s end of the year Form P11d.
If the tax rules or reporting requirements change, we will get in touch to explain the implications for your business.
Business Travel For Self Employed Traders
Following a recent case in front of the Upper Tier Tax Tribunal involving a doctor with a private practice (Dr Samadian), HMRC are applying the rules for business travel much more strictly.
The “wholly and exclusive” principle states that where there is both a business and a personal reason or benefit in meeting an expense, there is no tax relief for any of the expense. The doctor in question argued that as he was based at home (where he saw some of his patients and ran the business), the expenses of traveling to and from various hospitals and nursing homes should be an allowable business expense. Based on earlier cases, the Tribunal decided that the “habitual” journeys to two hospitals should not be allowed but less regular “itinerant” journeys to other locations would be allowed as a deduction.
Although this case involved a doctor, it has wide ranging implications for other self-employed individuals who operate their business from home and travel regularly to one or two locations. It will become increasingly important to keep a detailed mileage log of business journeys should HMRC challenge the deduction in the business accounts.
Do you still have questions regarding Taxation and Expenses? Feel Free to Phone us on 020 89310165 Now or Arrange a FREE No-Obligation Meeting with us.
