Your are bound to incur a variety of travel-related costs as a limited company owner. Most of these costs can be paid by, or claimed back from, your company.
As ever, you can only claim back the cost of travel if it has been incurred during the course of your business activities, and you cannot claim for home to work travel.
Paying for travel costs through your limited company
All types of travel can be legitimately paid for by your company – including taxis, air travel, trains and buses.
You should ensure that you keep a record of all journeys you make, together with receipts.
Claiming back mileage costs
If you use your own vehicle for business purposes, you can claim back a fixed mileage cost under the AMAPs legislation (Section 230(2) ITEPA 2003). These allowances are intended to cover all fuel and running costs.
For motor vehicles, company employees can claim back 45p per mile for the first 10,000 miles, and 25p per mile thereafter.
For motor bikes, there is a flat rate of 24p per mile, and for bicycles 20p per mile.
Even if you are a passenger in a vehicle, travelling for business purposes, you can claim for 5p/mile.
You can read the fine print (in EIM31240) on the HMRC site here.
You can claim for the cost of parking your vehicle, congestion charges, and tolls.
Limited company employees can claim for the cost of parking near the workplace, if applicable.
However, you cannot claim for the cost of parking tickets of fines.
The ’24 month rule’ and travel expenses
If you are providing professional services (e.g. as an IT contractor), you may well travel to a ‘temporary workplace’ for a period of time.
However, once you have worked at this temporary workplace for 24 months, or from the moment you are aware that the assignment will last 24 months or more, you must stop reclaiming travel expenses to that workplace.
To add a further complication, HMRC also has the ‘40% rule’, if you return to a temporary workplace you previously attended.
If you spent more than 40% of your time at this workplace over the previous 24 months, then you cannot reclaim for the subsequent cost of travel.
For further details, read our dedicated guide to the 24 month rule.
Company Owned Vehicles
The pros and cons of buying a vehicle through your limited company are complicated, as are the tax rules governing company car ownership. You can found out more in our dedicated guide to company car tax.