Are travel and professional subscriptions allowable expenses?
January 21, 2020
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January 21, 2020
The list of allowable expenses you can claim as a sole trader or a limited company is long and varied. While that’s ultimately to the benefit of tradespeople, it can make it difficult to work out what can and can’t be claimed for.
Some of the most confusing types of expenses are travel and professional subscriptions, but they needn’t be. In fact, it’s easier than you might think to determine whether these expenses can be claimed. With that in mind, Crunch accounting is here to help tradespeople understand how to claim their work travel and professional subscriptions as a taxable expense where allowed.
If you’ve already read our previous article on “Are my work tools and workwear taxable expenses?”, you’ll know where we’re heading here, but let’s run down HMRC’s method of determining what makes something an allowable expense.
The key test focuses on one simple question: can you prove that the thing you’re trying to claim as an expense has been purchased wholly and exclusively for work purposes?
Let’s say, for example, that you’ve just purchased a pair of steel-capped boots. If you can prove that these are only for work purposes – i.e. you only bought them to prevent injury at work – you can claim them. If you plan on wearing them at the weekend for the family barbeque, they’re no longer solely for work purposes, and can’t be claimed. So where does that leave travel and professional subscriptions?
The short answer is that, yes, you can claim both travel and professional subscriptions back as an expense, so long as you can meet the above ‘wholly and exclusively’ test.
So let’s say you’re a contractor based in south London, and you’ve been hired to help out with a job in Watford or Tottenham. To get there, you’re going to need to ride the rails and maybe even take a bus. Because you’re undertaking this journey solely for work purposes, you’ll be able to claim back the cost of your train and bus tickets as a taxable expense.
If you drive there instead, you can claim back business mileage, which we go into in more detail in our “Business mileage – who can claim?” article.
The only exception to this rule is if the place you’re travelling to is a permanent workplace or office. So if you’re based out of a business office, you cannot claim the mileage from home to your office, but any mileage to your clients to carry out work is allowed.
Other travel expenses, such as pay tolls, congestion charges, parking fees, and parking permits can also be claimed as a business expense, so long as – you guessed it – you can prove that any of these fees were incurred solely for business purposes.
If you’ve got your own company car or van, you can even claim for breakdown cover, repairs, and servicing. We go into more detail in our “Should I have a company car, van or motorcycle?” article.
However, you can’t claim parking fines as an expense – unfortunately, you’ll have to pay that one yourself.
Professional subscriptions such as membership of a trade body or registrations needed in order to enable you to trade are allowable, provided they are HMRC approved professional bodies which are relevant to your employment. If it is not directly relevant, then it’s not allowed. Membership of your local golf club if you’re a plumber is not going to be allowed no matter how much you think it may help your business!
Professional courses and training can be a slightly more complex area. You can claim for training that’s aimed at improving the skills you apply in your work. Additionally, you can claim travel and accommodation while attending a training course.
HMRC often disallow expenses for courses such as MBAs, as they offer new skills and knowledge rather than building on existing skills. In certain situations, they are allowed, but only if you demonstrate that they are reinforcing/improving your existing knowledge/skills.
Don’t forget that if you’re looking for help with your accounts or need someone to help you keep on top of your expenses, Crunch offers a complete accountancy service with unlimited support for limited companies and sole traders. We can also help you if you need to manage Construction Industry Scheme (CIS) filing and payments.
Crunch is an online accounting service that supports freelancers, contractors, and practically anyone who’s self-employed. We combine bespoke, online accounting software with actual human beings, so that you’re always able to access your accounts and seek the support you need. Find out more at crunch.co.uk.
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