The Pocket Guide to Travel and Fuel Expenses for the Self-Employed
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If you’re self-employed, your business will have various running costs that you’ll be responsible for managing. Discover how to keep tabs on your travel and fuel expenses with our simple guide.
There are many ways to reduce your tax liability if you’re self-employed. Running your own business requires a lot of skill and determination, but it also requires you to be smart with your finances. Something that can be easy to overlook is paying tax. However, there are some expenses that you can deduct from your tax bill as ‘allowable expenses’.
Here, we have navigated the best way to calculate the two most common expenses you will face; travel and fuel.
Travel and mileage expenses
When you travel for business and work away from your usual office, you are entitled to claim back your mileage expenses, so that you, personally, are not out of pocket.
Reclaiming mileage is separate from the usual personal tax allowance you are allowed – due to go up to £12,500 for a typical worker – which stipulates how much you are allowed to earn before you are taxed on it.
Assuming you do earn over £12,500, when you claim back mileage, you can deduct it from the earnings you would usually be taxed upon. This essentially lowers the amount you earn over the £12,500 threshold, meaning you will pay less tax.
Here are the rates (per mile) permitted by the Government:
To claim for fuel costs, you’ll need to work out your mileage. If you’re a sole trader or business partnership without a link to a limited company, you can use simplified expenses. These are a way of calculating some of your business expenses using flat rates instead of working out your actual business costs.
Here’s how to use them:
1. Record your business miles for vehicles, hours you work at home and how many people live at your business premises over the year
2. At the end of the tax year use the flat rates for vehicles, working from home, and living at your business premises to work out your expenses
3. Include these amounts in the total for your expenses in your Self Assessment tax return
As an Allstar customer, you can easily keep tabs on your mileage with our Business Mileage Monitor (BMM). It works in conjunction with any of our fuel cards to give you a fully integrated, automated process that helps you to effectively manage your fuel expenses. You can even split up both private and business mileage, so all the journeys they submit are HMRC-compliant and you don’t see their personal journeys.
It may be that you run a self-employed business that employs a few members of staff, or perhaps even a whole team that drive as part of their jobs. If you provide them with a company car and fuel benefits, you need to report this to HMRC and pay Class 1A National Insurance on their value.
HMRC will need to be informed if you have provided company cars and fuel in a salary sacrifice arrangement. In order to be exempt, your employees must use the car or fuel in one of the following ways:
- Privately owned cars
- Cars available for business journeys only
- Cars adapted for an employee with a disability
- Fuel that employees pay for
- Pool cars
- Cars provided to close relatives
More information about fuel benefits can be found on the HMRC website.
If you provide the car and fuel in another way, you might not have to report or pay anything.
If the employee only uses the company car for business purposes, then you don’t have report or pay anything to HMRC. It’s important to communicate what is classed as ‘business use’ to staff, to keep track of their mileage, and check that they are not using the vehicle for private journeys.
As an employer, you are not required to pay or report on fuel if either:
- Your employees buy the fuel for their own use
- You buy the fuel and then your employees pay you back during the tax year. Their payment must be is equal to or more than the amount you paid
If you buy and provide fuel that an employee uses privately and they don’t reimburse you, it would be considered a ‘fuel benefit’ and so will need to be reported to HMRC.
Minimise fuel costs with Allstar
As a self-employed worker, you may findyou focus in on the local areaOur Supermarket+ fuel card gives you controlled access to thousands of major supermarket sites, including Tesco, Asda, Morrisons and Sainsbury’s. It also gives you access to Discount Diesel sites across the country, where you can make further savings on diesel, so you can be confident that you’re getting the best-priced fuel available.
As an Allstar customer you can reduce your fuel costs, maximise control over expenses and gain full visibility over all your fuel spend with 24/7 online account management.
Discover how the Allstar Supermarket+ fuel card can help you by getting in touch with our expert team on 0345 266 5101