Flights

Conditions

1. GOV.UK's self-employed expenses guidance lists train, bus, tram, air and taxi fares among the car, van and travel costs a sole trader or individual in a business partnership can claim as allowable business expenses, and lists travel between home and work among the costs you cannot claim.
2. The statutory test for a sole trader is section 34 ITTOIA 2005: in calculating the profits of a trade, no deduction is allowed for expenses not incurred wholly and exclusively for the purposes of the trade. HMRC's guidance is that the cost of travelling from home to place of work is generally disallowed, because the journey is, at least in part, occasioned by the private choice of where to live, and that it does not matter that you may at times work at home or keep your business records, materials or tools there (BIM37605).
3. There is an exception for an itinerant trade. Where an itinerant trader's base of operations is at their residence, HMRC says to allow the costs of travelling between the residence and the sites at which the trader works, an itinerant trader being one who travels from home to a number of different locations for the purely temporary purpose, at each, of completing a job of work (BIM37620). That does not reach travel from a home outside the trader's 'territory' (BIM37635).
4. For a limited company the test is section 54(1)(a) CTA 2009: to qualify for a deduction, the trade purpose of the expense must be the sole purpose (BIM37600). Where a company incurs an expense that is linked to the personal interests of a director, HMRC says first to consider whether the expenditure gives rise to benefits taxable on the director as part of their remuneration package, and if it is taxable on the director as part of that package, to allow the company the deduction as part of the costs of employing the director (BIM47107).
5. For a sole trader or company, HMRC's guidance on a mixed holiday and business trip is that where duality of purpose in travel is established, the costs are disallowable, because no part of the expenditure is referable wholly and exclusively to the trade (BIM37610). Its example is a solicitor who travelled to conferences abroad intending also to have a holiday with his wife, where the whole of the expenditure was disallowed. Where the sole purpose of the travel is the trade, the cost is allowable notwithstanding some incidental private benefit (BIM37615).
6. For an employee or director there are two routes to relief. Section 337 ITEPA 2003 allows a deduction for travel expenses the employee is obliged to incur and pay as holder of the employment that are necessarily incurred on travelling in the performance of the duties. Section 338 allows a deduction for travel expenses the employee is obliged to incur and pay as holder of the employment that are attributable to the employee's necessary attendance at any place in the performance of the duties, but not for the expenses of ordinary commuting or private travel, or of travel between any two places that is for practical purposes substantially either of them (EIM31815). Private travel is travel between home and a place that is not a workplace, or between two places neither of which is a workplace (section 338(5)). HMRC's guidance is that it should not argue that a journey to or from a temporary workplace is substantially ordinary commuting where the extra distance involved is 10 miles or more each way, and that a journey to a temporary workplace in a completely different direction from the ordinary commuting journey is not substantially ordinary commuting even if the distance is the same (EIM32300).
7. Ordinary commuting is defined by the places travelled between: section 338(3) ITEPA 2003 defines it as travel between the employee's home and a permanent workplace, or between a place that is not a workplace and a permanent workplace. Whether a place is a permanent or a temporary workplace, and so whether a journey to it is ordinary commuting, is a statutory test with several parts, and there are separate rules where you provide your services through an employment intermediary such as an agency, an umbrella company or your own company (section 339A ITEPA 2003, EIM32135). The Business travel page sets that test out. How it applies turns on your own working pattern and contract, so it is worth having an accountant check.
8. For an employee or director, a trip that mixes business and private purposes is decided by a different rule. HMRC's rule is that a single expense can be apportioned if a definite part or proportion of it can properly be attributed wholly and exclusively to the performance of the duties, and that part can be deducted while the rest cannot; but expenditure cannot be apportioned where it serves two or more purposes concurrently and one of them is not to do with the performance of the duties, unless the non-business purpose is merely incidental to the business purpose (EIM31661).
9. For an employee or director, HMRC states that the tests that apply to travel expenses relate to the nature of the expense and not to the amount, and that a deduction should not be refused for first class rail travel on the basis that the same journey could have been made more cheaply in standard class. Where travel arrangements are unusually lavish, HMRC considers whether the expenditure is genuinely attributable to business travel or is some sort of reward (EIM31835). HMRC's example is rail travel, but the rule it states covers travel expenses generally.
10. GOV.UK's guidance for employees says you cannot claim for travelling to and from work, unless you're travelling to a temporary place of work, and lists public transport costs among the costs you can claim. If your employer has paid some of your expenses, you can only claim tax relief on the amount they have not paid, and if you complete a Self Assessment tax return, you must claim through your tax return instead.
11. Where an employer pays or reimburses travel costs, section 289A ITEPA 2003 means no income tax charge arises on the amount under Chapter 3 of Part 3 (taxable benefits: expenses payments) where an equal or greater amount would be allowed as a deduction from the employee's earnings under Chapter 2 or 5 of Part 5 (Chapter 2 being where the travel rules in sections 337, 338, 339 and 339A sit), and the payment or reimbursement is not provided pursuant to relevant salary sacrifice arrangements. GOV.UK's guidance for employers counts all non-business travel as private, including the journey between an employee's home and permanent workplace, and says that if an employer reimburses more than the necessary costs of business travel, the extra amount counts as earnings, with PAYE tax and Class 1 National Insurance deducted and paid through payroll.

Common mistakes

• Treating a regular flight to a permanent work location as business travel because flying feels different from commuting.
• Assuming the holiday part of a sole trader's trip can simply be stripped out and the flights claimed. Where travel has a dual purpose, HMRC treats the costs as disallowable, because no part of the expenditure is referable wholly and exclusively to the trade (BIM37610).
• Not keeping boarding passes or e-ticket records alongside the purchase receipt — digital boarding passes can be saved easily and should be.

What to keep

• Flight booking confirmation and payment receipt.
• Boarding passes where possible (digital copies are fine).
• A note of the business purpose of the journey.

Real-world example

A sole-trader film producer flies from London to Glasgow for a two-day client shoot and returns the same week. If the shoot was the sole purpose of the trip, the flights are allowable notwithstanding some incidental private benefit (BIM37615). If, when she booked, she also meant the trip to be a holiday, HMRC's guidance treats that as a dual purpose, and the travel costs are disallowable (BIM37610). Which it was is a question of fact, so she keeps a note of why the trip was made and which days the work required.

Frequently asked