This is a news story and may not be up to date. You can find the date it was published above the title. Our Tax Guides feature the latest up-to-date tax information and guidance. 

Published on 6 December 2024

Self-employed with travel and accommodation expenses? Are you claiming the right amount?

News

If you are self-employed, you might need to make journeys or stay away from home in the course of running your business. This article looks at some common scenarios where it might not always be clear what travel and accommodation costs qualify as a business expense, to help you decide what to claim when preparing accounts for your self assessment tax return.

A person sat at a desk with a colourful highlight across the image with the word 'EXPENSES' in white text.
Canva.com

Content on this page:

The law says that if you are self-employed you can deduct expenses that are wholly and exclusively for business purposes when calculating taxable profit. We explain the basic rules in our main website guidance, however, when considering travel and/or accommodation expenses, the rules can be quite complicated in some circumstances.

Is the journey a business journey or is it ordinary commuting?

For the cost of a journey to be an allowable business expense it must be wholly and exclusively for business purposes. The cost of a journey which takes you from home to your main place of work would not normally fall into this category as it would be regarded as ordinary commuting. 

Example – business journeys or ordinary commuting?

Bailey and Maja live in Blackpool. They are both self-employed, Bailey runs a café in Fleetwood and Maja runs a bookshop in Preston. Each weekday, Bailey takes a tram to Fleetwood to his café and Maja catches a train to Preston to her bookshop. These journeys are from home to a place of work and therefore are journeys which count as ordinary commuting. The cost of these daily journeys are not allowable expenses for tax purposes for either of them.

Once per month Maja goes from her shop in Preston to her suppliers in Manchester to order her stock. As Maja’s journey to Manchester from Preston is for a business purpose (to buy stock) this is a business journey and so the cost of the train journey is an allowable expense in her self-employed accounts. 

However, there are some circumstances where it is less clear whether the journey is for business purposes or whether it is ordinary commuting.

This might be the case if your work means you visit lots of different sites to carry out the work. There are two main scenarios where this might happen:

  1. working at a particular site for a period of time before moving on to another site
  2. regularly going to the same sites each week/month

Work carried out at lots of different locations

If you travel from home to different sites for your self-employment, temporarily working at one place until your work is complete before moving to the next, you are called an 'itinerant trader’. If you are an itinerant trader, you are likely to be based at home and keep your tools, equipment, business records etc there.  HMRC will usually allow the costs of travel between home and the sites where the work is carried out as a business expense in this situation, provided you are working at the site temporarily, and the site is within a reasonable distance of your home.

Example – itinerant trader with temporary work locations

Stefan is a self-employed bricklayer. He often works with a local house building company and in 2023/24 he worked at four different sites for them:

  • Site 1 – April and May 2023
  • Site 2 – July 2023
  • Site 3 – September and the first two weeks of October 2023
  • Site 4 – February and March 2024

All sites are in Stefan’s local area.

HMRC should allow the costs of travel between home and the various sites as a business expense as the sites are all in Stefan’s local area. Therefore, Stefan can claim these travel costs in his accounts.

The position is similar if you are based at home and don’t have a separate office or work-base elsewhere, and visit lots of different customers in your local area each day.

Example – itinerant trader with multiple work locations

Elsa is a mobile hairdresser. She keeps all her hairdressing equipment at her home, and she visits her clients at their houses. Depending on what each client wants her to do, she can have appointments with up to five clients each day she works.  Sometimes she will go home in between appointments if she has a big gap, otherwise she will go from one appointment to another.

Elsa’s travel between home and her customers would usually be regarded as business travel and so the expenses should be allowable for tax purposes. Her travel costs relating to journeys between clients’ houses would also be allowable.

Work carried out at same locations in a regular pattern

But what if your work is carried out at different locations but on a regular basis, such as each week/month? In these circumstances, HMRC are more likely to regard the regular locations as permanent places of work, and so treat the journeys as ordinary commuting which is not tax deductible.

Example – regular pattern of locations

Michaela is a self-employed market trader. She has a stall at five different local markets each week where she sells children’s clothing. She has no other base for her business as she keeps her stock at home and does her paperwork at home. Her home address is also her business address.

In December 2023 she was invited to have a stall at three separate Christmas markets in nearby towns, which she had never done before.

When Michaela prepares her accounts for the year ended 5 April 2024 she should not claim any expenses for the cost of travelling to and from the regular markets from her home, however, she should be able to claim expenses for travelling to and from the temporary Christmas markets.

Is the journey wholly and exclusively a business journey?

If you have established that a journey is a business journey and not ordinary commuting, the next step is to consider if it is wholly and exclusively for business purposes.

Sometimes when you make a business trip you might be accompanied by someone else, for example a spouse or other family member. Therefore, the costs associated with the trip cover not just the self-employed person but also their companion.  If you meet the full cost of the trip, and your companion is not connected to the self-employment in any way, this makes the costs associated with the trip not ‘wholly and exclusively’ for business purposes. Therefore, strictly, the costs are not an allowable expense in the self-employed accounts.

However, if your share of the travel costs can be clearly identified, HMRC will usually allow this proportion of the total expenses as an expense in your self-employed accounts. 

Example – apportioning travel expenses-companion

Miguel is a self-employed author who lives in London. Every year he attends a two-day literary festival in Exeter, Devon. As his brother Paulo likes to visit Devon he goes with him. They go to Exeter on the train and book two rooms in a local hotel.  The total cost is £400 for the trip which Miguel pays for. Even though the overall expenditure for the trip relates to both Miguel and Paulo, as the costs attributable to Miguel can be easily identified, Miguel can claim his share of the travel and accommodation expenses, and so claims £200 in his self-employed accounts.

A similar approach can be taken where a business trip is extended for personal reasons, if costs can be specifically allocated to the business element of the trip.

Example – apportioning travel expenses – holiday

Eloise is a self-employed wedding photographer and she is hired to photograph the wedding of clients who are getting married on the Isle of Skye. In view of the long distance between her home and the Isle of Skye, Eloise books two nights at the local hotel to enable her to carry out this work.  As Eloise had never been to the Isle of Skye before, a few weeks later she decides to extend what would otherwise have been a two night stay to a seven night stay so she can have a short holiday once her work is finished. The cost of the hotel is £70 per night.

The total cost for the hotel is £490. As the work element of the trip is effectively two nights, Eloise can claim accommodation costs of £140 in her self-employed accounts in respect of the trip.

As regards the travel costs of her trip to the Isle of Skye, as the trip is both a business and personal trip and the personal element of the trip is substantial, the expenses are not wholly and exclusively for business purposes and so Eloise should not claim any travel expenses relating to this trip in her accounts.

Has your client agreed to pay your travel expenses?

Sometimes you may be hired to do some work for a client and they agree to pay your travel expenses as part of the engagement. They may ask you to invoice them specifically for the actual travel expenses incurred or they may pay you a fixed amount to cover the travel expenses you will need to pay out. This fixed amount is sometimes called a ‘round sum allowance’ or ‘per diem’ allowance.

With these situations it is usually clear that the journey will qualify as a business journey for tax purposes. Therefore, the travel costs you have to pay can be claimed as a business expense in the normal way under the rules explained above. However, the income you receive from the client for the expenses must be included as income in the accounts too. 

Example – recharged expenses

Omer is a self-employed make-up artist. He is hired for a two-week period by a theatre company who are performing locally and as part of the agreement they have agreed to pay his travel to and from the theatre, as well as his daily fee of £150.

Once the work is completed Omer invoices the theatre company for 14 days’ work at £150 per day and also for taxi expenses of £30 per day (as he goes to and from the theatre by taxi which is £15 each way.) The total amount Omer receives once his invoice is paid by the theatre company is £2,520, as follows:

14 x 150 = £          2,100
14 x 30 = £              420
Total due £          2,520 

When Omer prepares his accounts he must remember to include the full £2,520 as income and claim the cost of his taxis of £420 as travel expenses.

Instead of paying the full amount of Omer’s travel expenses, the theatre company might have said they would give Omer an allowance of say, £25 per day for his expenses. In this situation Omer would have received £2,450 in total from the client. This would be made up of his daily fee as above of £2,100 together with £25/day for his expenses which is £350. Therefore, he would include income of £2,450 in his accounts but also still claim the actual costs of the taxis of £420 as travel expenses.

Conclusion

We have shown above that you must think carefully about what travel and accommodation expenses you claim in your self-employed accounts to minimise the chances of making an error on your tax return. In the event of an enquiry into your tax affairs by HMRC, if they do not accept that you have only claimed travel and accommodation expenses which are wholly and exclusively business-related, you might need to pay additional income tax, national insurance. HMRC can also charge interest and penalties for making mistakes with your claims.

More information

As this can be a very tricky area there are many cases where there is a dispute between the taxpayer and HMRC about whether or not some travel expenses should be allowable for tax purposes. In order to resolve disputes, cases sometimes have to be taken to independent tribunals or the courts where a judge makes a decision as to what the correct position is. HMRC’s Business Income Manual provides more detail on travel expenses and includes details of some of the relevant cases in this area too. 

Sharron West
Technical officer

Contact us
Back to top