Tax relief on your travel expenses
Virtually everyone who is self-employed incurs travel costs, but it may sometimes be hard to decide whether these expenses are allowable for tax.
Unfortunately, there is no detailed guidance from HMRC about such travel expenses, and instead we have to look at what the courts have decided. The latest decision does little to help matters.
The cost of a self-employed person travelling from home to their place of work is not normally allowed as an expense, and it makes no difference if they keep their business records, materials, tools etc at home. In the case of Newsom v Robertson (1952), a barrister worked part-time at home when the courts were sitting and full-time when they were not. Travel between home and his chambers was disallowed on the basis that the chambers were the base of operations. And because travel costs are disallowed, so are incidental costs such as car parking and congestion charges. However, travel costs to and from home are allowed as home is your base of operations, and you travel to a number of different temporary work locations. In the case of Horton v Young (1971), a self-employed bricklayer was successful in claiming travel costs between home and various temporary building sites.
The essential point is that the nature of the trade or profession must be itinerant and there should be no predictability about the place of work.
The upper-tier tribunal decision in the recent case of Doctor Samadian v HMRC (2014) reinforced the above principle. The doctor was employed full-time at two NHS hospitals, and he was also in self-employed private practice working from an office at home. He saw his private patients at consulting rooms that he hired at two private hospitals, and also visited patients in their homes. HMRC did not dispute the deductibility of travel between the two private hospitals, between the private hospitals and a patient’s home, and between home and a patient’s home.
The dispute concerned travel between the doctor’s home and the private hospitals, and also between the NHS and the private hospitals, and in both cases the decision was in HMRC’s favour. Although home and the private hospitals were all places of work, the doctor was not considered to be itinerant, and his attendance at the private hospitals was regular and predictable. The decision means that a deduction for the cost of travel to another place of business will only be allowed in very exceptional circumstances.