Your limited company travel expenses
As an owner of a limited company, travel expense costs will arise from commuting to meetings, conferences, events, or any other business activities. The costs incurred can be paid for by your limited company, or claimed back after the excursion.
Eligible travel claims through your Limited Company
Travel between your home and your company address is not claimable, nor can it be paid for by your limited company. Only travel expenses incurred through business activities, or travel to a temporary work place, are eligible for a claim, or can be paid for by your limited company. (Please see notes on the 24 month rule and the 40% rule below, regarding travel to a temporary work place.)
Legitimate travel costs and paying through your limited company
Air travel, buses, hire cars, trains and taxis can all be paid for by your limited company. All company travel should be noted and receipts kept and filed for the purposes of your company accounts.
How to claim back your mileage
If you are a limited company owner-using your own car for business excursions-you can claim back your mileage costs. You must use the approved mileage allowance payments (AMAP). This is set by HMRC and is broken down like so:
- Cars and vans: you, (or any other limited company employee), can claim back 45p for the first 10,000 miles and then 25p per mile thereafter.
- Motorcyles: 24p per mile
- Bicycles: 20p per mile
- Passenger rates: as a passenger, you can still claim 5p per mile.
As a limited company owner, you will not pay tax or NI contributions on an ‘approved amount’ of mileage. For further instruction please consult the AMAP section on the HMRC website.
If you are affected by the IR35, or ‘intermediaries legislation’ then you cannot claim tax relief on travel expenses. If you are contracted through an intermediary, please read the ‘IR35’ section of the HMRC website.
Parking expenses can be reclaimed through your limited company. You can claim the costs back for parking charges at, or near, your place of work. Furthermore, you can claim for congestion, parking and toll charges incurred on business excursions. Parking tickets and fines cannot be claimed through your limited company.
Travel claims for a temporary work place, the 24 month rule
Travel claims are only eligible if you are commuting to a temporary place of work. The HMRC operate a 24 month rule. Once you receive notification that the contract will last more than 24 months then you must cease to claim travel costs to and from this workplace. Alternatively, if you are unaware of the length of project, but it continues for 24 months, then you must stop claiming.
The HMRC operate another travel expense regulation known as the 40% rule. If you are contracted to work 40% of your time, at the same work address, within a 24 month period, then you can no longer claim your travel expenses to and from there.
Company cars and vans
There are many considerations to make before purchasing a vehicle through your limited company. Please get in touch for more information.