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 Travel Expenses - Tax Allowable ?

Essentially private travel is not an allowable expense for tax purposes, whereas business travel is tax deductible. Unfortunately, the question of what, under tax legislation, is business travel for home based individuals who work on site is not always clear. Tax legislation went part way towards clarifying this with effect from 6 April 1998, but great care is still needed to ensure that expenses are not over-claimed, or backdated penalties and interest are at risk.

The first point is that you must have a home office or workshop to be based at home at all. This can be either a specific room (with some minor private use as well to avoid CGT problems) or a more general use of the whole home. Clearly some business equipment and furniture at home assists the claim. If you spend 60% or more of your working time at your home office/workshop then you should have no problem claiming all business travel, accommodation, and subsistence costs. Otherwise consider the next two sections.

The concept is that travel costs are allowable when attributable to the necessary attendance at any place in the performance of work duties subject to the proviso that they are not 'ordinary commuting' between home and a 'permanent workplace'. A permanent workplace is one where : (1) continuous work at that place goes on for more than 24 months; or (2) continuous work at that place is capable of going on for more than 24 months.

Avoidance : (a) The Revenue have said they will not accept a short break followed by a return to the same site as an acceptable way to prolong the 24 month period. (b) The legislation blocks a simple move from the on-site location to a different building in the same town.

Summary:  Travel from home base to site is allowable: (1) in full where the contract is for a period not capable of exceeding 24 months; (2) in full where subsequent continuous contract extensions do not take the total period over 24 months; (3) for the first 24 months only where the extended contract exceeds 24 months. Note that where it is known that the contract will exceed 24 months from day one then no tax relief is available. Also tax relief ceases to be available from the date that it becomes clear that the total period will exceed 24 months.

There are other complications, so professional advice is essential.

Company car. Business mileage for company cars and for privately owned car mileage claims, follows the same rules as for other travel expenses explained above.

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