Maximise Your Mileage Claims: What Every Business Owner Should Know
Thursday, October 24, 2024
Managing costs and running your business efficiently is key as a business owner. One area often overlooked is claiming mileage for your business travel. Whether travelling between job sites, meeting clients, or running essential business errands, it’s important to understand the rules around what you can claim and can't.
Can You Claim Mileage? HMRC's Guidelines
HMRC allows business owners to claim mileage for business-related travel, but the rules around what counts as business mileage can be tricky. One important distinction is between temporary and permanent workplaces. Understanding this can help you claim the correct mileage and comply with tax rules.
Temporary Workplace:
A temporary workplace is somewhere you go to carry out work for a short period or a specific project. Even if you visit the location regularly (such as every week), it can still be considered temporary if the work itself is not ongoing.
One fundamental rule to remember is the 24-Month Rule: if you expect to work at a location for more than 24 months or spend 40% or more of your time there, it is no longer considered temporary. Once that threshold is reached, you can't claim mileage for travel to that location anymore, as it becomes a permanent workplace.
Permanent Workplace:
A permanent workplace is where you carry out most of your work or attend regularly over a long period. For example, if you have an office, shop, or workshop where you spend most of your time, this is considered a permanent workplace, and HMRC treats travel to and from that location as ordinary commuting. Once a workplace is considered permanent, mileage claims for travel to this location are no longer allowed.
Managing costs and running your business efficiently is key as a business owner. One area often overlooked is claiming mileage for your business travel. Whether travelling between job sites, meeting clients, or running essential business errands, it’s important to understand the rules around what you can claim and can't.
Can You Claim Mileage? HMRC's Guidelines
HMRC allows business owners to claim mileage for business-related travel, but the rules around what counts as business mileage can be tricky. One important distinction is between temporary and permanent workplaces. Understanding this can help you claim the correct mileage and comply with tax rules.
Temporary Workplace:
A temporary workplace is somewhere you go to carry out work for a short period or a specific project. Even if you visit the location regularly (such as every week), it can still be considered temporary if the work itself is not ongoing.
One fundamental rule to remember is the 24-Month Rule: if you expect to work at a location for more than 24 months or spend 40% or more of your time there, it is no longer considered temporary. Once that threshold is reached, you can't claim mileage for travel to that location anymore, as it becomes a permanent workplace.
Permanent Workplace:
A permanent workplace is where you carry out most of your work or attend regularly over a long period. For example, if you have an office, shop, or workshop where you spend most of your time, this is considered a permanent workplace, and HMRC treats travel to and from that location as ordinary commuting. Once a workplace is considered permanent, mileage claims for travel to this location are no longer allowed.
Why Does This Matter for Your Business?
Understanding this distinction can save money for many business owners, particularly those in construction, property management, or consultancy, where job sites and client meetings are constantly changing. Claiming mileage for temporary workplaces can help reduce your taxable income, putting more money back into your business. However, knowing when your work at a location becomes regular enough to count as permanent is important.
How to Ensure You're Claiming Correctly
To make sure you’re claiming the correct mileage:
* Track your journeys carefully, keeping notes on where you’ve been and why.
* Watch the 24-month rule—if you’ve been working at the same site for over two years, it’s time to review
whether it’s still temporary.
* Keep a precise log of what each journey was for to ensure its business-related and not just regular
commuting.
Need Help Navigating the Rules?
Mileage claims can get tricky, especially if your work takes you to multiple locations. If you're unsure whether your business travel counts as temporary or permanent, I can help you navigate the rules and ensure you’re claiming everything you're entitled to.
Book a discovery call today, and let’s work through it together: https://calendly.com/ellacott-morris/discoverycall
