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What travel expenses can I claim?

Q. As a contractor working in London, but living 4 hours away I often work from my home office and then travel down to London staying overnight for say 2 nights per week. I therefore incur expenses for fuel, train, hotel and subsistence, which I personally pay for and then claim back from my limited company, (they are not reimbursed by the client). I am coming up to the 24 month mark on my current contract, it may possibly extend by another 3 months, this is not yet agreed. I am about to take on another London based client, and will therefore split my week between the two clients, say 2 days and 3 days each week. Can I continue to claim back from my limited company even though the journey and the hotel don’t change? Do I just switch the client name I incur expenses for in my accounting records?

A. Unfortunately, you will no longer be able to claim travelling expenses because an employee’s workplace can change without significantly affecting their journey to work.

I would refer you to sections 4.6 & 4.7 of HMRC guidance 490 – Employee Travel. This states:

Where an employee moves offices from Cardiff to Edinburgh there is clearly a change of workplace affecting the employee’s journey to work. But the position is different if an employee moves to a new office in the next door building. In these circumstances there is no significant effect on the employee’s journey to work and under the tax rules there is no change of workplace.

This rule prevents employers from making small changes to the place where an employee works to take advantage of the temporary workplace rules. Where there is no significant change to an employee’s journey the rule operates to treat the 2 workplaces as being the same.

Where a change in location has a significant effect on:

  • the journey an employee has to make to get to work; and
  • the cost of the journey to work

the new location is a new workplace even if it is geographically close to the old workplace.

Section 4.9 goes on to say:

Applying this rule may have the effect of denying tax relief for travel over longer distances in metropolitan areas than in rural areas. A change of location from Queensway to Bank could involve 8 stops on the Central line of the London Underground at no extra cost. In these circumstances the modification rule comes into play. But 10 stops to the north on a train from Preston gets into Scotland, and 10 stops to the south could involve a journey beyond London, both at considerable extra cost.

By Contractor Doctor


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