Can I offset travel expenses against tax?

FatVonD

I've been freelancing on and off since the summer and most places have deducted tax and NI at source but the company I've been working for since September I have to invoice as a sole trader and they then pay me gross. I work in their building rather than from home, does anyone know if I can offset the cost of my rail travel against tax for this period?

Thanks in advance

easy

FatVonD wrote: »

I've been freelancing on and off since the summer and most places have deducted tax and NI at source but the company I've been working for since September I have to invoice as a sole trader and they then pay me gross. I work in their building rather than from home, does anyone know if I can offset the cost of my rail travel against tax for this period?

Thanks in advance

If you are truly self employed, then you could, for a period of up to 2 years. You need to keep proof of your expenses (tickets or the receipt for the purchase of your tickets).

However, the fact that you invoice, and you are paid gross, isn't enough to qualify as being self-employed, and this could come back to bite you, and the 'employer', if you haven't got this right.

The criteria include

1. Are you free to set your own hours?
2. Do you use your own tools (or laptop, calculator/pens etc) ?.
3. Crucially, would you be able to send in someone else to do the work on your behalf, and invoice your 'employer' in the same way ( it doesn't matter that you don't actually have anyone else to send, the point is this - is the employer using you because you are a snurgwangler, and will be happy if you send an equally competent snurgwangler to do the job for them, or does it have to be you that does the work for them)?

There are other measures, see this page for starters
http://www.hmrc.gov.uk/paye/employees/start-leave/status.htm

If you do satisfy the criteria for being classed as self employed, then make sure you have registered as such with HMRC (you should have done this before issuing your first invoice).

bris

No, you can't claim tax relief on jorneys to and from work, you can claim it if you are sent anywhere in the course of work.

easy

bris wrote: »

No, you can't claim tax relief on jorneys to and from work, you can claim it if you are sent anywhere in the course of work.

If you are self employed, you can, because reaching your client's premises is, in effect, being sent somewhere in the course of your work.

However, if you are sent to the same place, everyday for a period of more than 2 years, then it becomes your usual place of work, and from that point on, you cannot.

BoGoF

Where do you get your 2 year rule from?

OP - post this in the cutting tax forum - you'll get a better response

easy

BoGoF wrote: »

Where do you get your 2 year rule from?

EIM32084 - Travel expenses: travel for necessary attendance: definitions: temporary workplace: example

An employee has worked for his employer for 3 years. He is sent to perform full-time duties at a workplace for 18 months. After 10 months the posting is extended to 28 months. A deduction is due for the full cost of travel to and from the workplace during the first 10 months but not after that.

The workplace is capable of being a temporary workplace because his attendance is for a limited duration, see EIM32075. At the outset the workplace is not excluded from being a temporary workplace by the further rule explained in EIM32080. Although his attendance is in the course of a period of continuous work (he works there for 40% or more of his working time) it is not expected at the outset that it will exceed 24 months. So the workplace is a temporary workplace at that time.

After 10 months the expectation changes. The workplace is now excluded from being a temporary workplace by the further rule. His attendance is in the course of a period of continuous work and that period is expected to exceed 24 months. Therefore after 10 months the workplace becomes a permanent workplace.

Unless you can reasonably anticipate this work contract/period will continue on a daily basis for more than 24 months, then the client's premises will be a temporary place of work.

If you anticipate that the contract will continue for more than 2 years, using your services for full-time working hours, then of course it would be your normal place of work. BUT I bet that if you worked full time for a single client for 2 years+, I dare to bet HMRC will challenge that you were actually self employed, and would chase the client for PAYE & Employers NI.

BoGoF

That manual is called the Employment Income Manual so has no relevance to self-employment.

Acc72

BoGoF wrote: »

Where do you get your 2 year rule from?

OP - post this in the cutting tax forum - you'll get a better response

Easy has provided the answer required.

You just need to keep a record of all your business miles - you are allowed to claim 45p per business mile for the first 10,000 miles in a tax year and then 25p for every subsequent mile in excess of 10,000 in a tax year.

As Easy said, if this temporary contract extends beyond 24 months then it is deemed to be a permanent workplace and the travel to work will be viewed as "commuting" which is not tax deductable.

Have a look at HMRC Booklet 490 Chapter 3.

bris

easy wrote: »

If you are self employed, you can, because reaching your client's premises is, in effect, being sent somewhere in the course of your work.

However, if you are sent to the same place, everyday for a period of more than 2 years, then it becomes your usual place of work, and from that point on, you cannot.

I had no idea there was a two year rule either, is there? (I see it now thanks) [STRIKE]As far as I am aware it would be classed as "ordinary commuting" and therefor not tax deductable.[/STRIKE]

BoGoF

Acc72 wrote: »

Easy has provided the answer required.

You just need to keep a record of all your business miles - you are allowed to claim 45p per business mile for the first 10,000 miles in a tax year and then 25p for every subsequent mile in excess of 10,000 in a tax year.

As Easy said, if this temporary contract extends beyond 24 months then it is deemed to be a permanent workplace and the travel to work will be viewed as "commuting" which is not tax deductable.

Have a look at HMRC Booklet 490 Chapter 3.

No he hasn't if OP is self-employed

easy

Bris, you are confusing the issue. If the OP had an office of his own, then he could NOT claim travel expenses between his home and HIS OWN office. However, if he does not have other offices I believe it is acceptable to consider his home is his base, and claim expenses between his home and his clients premises, in the same way that he could claim expenses for travelling to a client from his office (if he had one).

I re-iterate however, he needs to be very sure that he passes the self-employed test.