If you are self-employed, it is important to understand which car and travel costs are allowable for tax purposes.
You may claim allowable business expenses for car, van, and travel costs, which will reduce your taxable profits. Typical allowable costs include:
- Vehicle insurance
- Repairs and servicing
- Fuel
- Parking
- Hire charges
- Vehicle tax and licence fees
- Breakdown cover
- Train, bus, tram, air, and taxi fares
- Hotel accommodation
- Meals on overnight business trips
You cannot claim for:
- Non-business driving or travel costs
- Fines or penalty charges
- Personal travel, including commuting between home and a permanent workplace (which is generally not allowable)
For vehicle costs, you can choose between claiming actual running costs or using HMRC’s simplified expenses, which applies a flat-rate mileage allowance.
If you purchase a vehicle for use in your business, the method of relief will depend on your accounting basis. Under traditional accounting, capital allowances may be claimed on the cost of the vehicle. If you use the cash basis, capital allowances are also available, provided simplified expenses are not being used for that vehicle. Other vehicle-related and travel costs can be claimed as allowable business expenses in the usual way.