Following on from the success of last month’s blog on how to reduce your costs whilst staying away from home, we thought we would provide you with some further money saving tips. This time in relation to the costs incurred whilst travelling as part of your contracting work life.
As a contractor you may be required to travel to a ‘base’ site each day, or in some cases even further afield to meet with a client. Travelling by car will most probably be the favoured option for most contractors, and although this may be somewhat tiring, you do also have the privilege of being able to offset some tax through claiming the mileage you undertake. Be mindful however, this only applies if the mileage is completed in a vehicle that you personally own.
Mileage rates are referred to as AMAPs (Approved Mileage Allowance Payments) and set out how much can be claimed for, depending on how many miles are completed.
On the occasions that you may be required to travel by train to your final destination, there are various ways in which extra pennies can be saved. Most people will default to visiting the National Rail website to look for train times and fares. However, this central site will not offer the best rates that can be found out there. Websites such as The Train Line can save on average around 43% on fares if tickets are booked in advance, rather than being bought from your local station on the day of departure.
It is now easier than ever to purchase tickets as most websites have their own corresponding mobile apps enabling you to book on the go. The Train Line has a feature called ‘Ticket Alert’ which notifies you if particular tickets go on sale. All you have to do is add information regarding the journey in which you wish to travel.
Alternative Modes of Transport
Granted, it is extremely easy to jump into your car if your place of work is only a 5-minute drive away, but have you ever considered waking up 10 minutes earlier and walking to work instead? After all it costs absolutely nothing to walk and also adds an easy supply of exercise to your day.
Alternatively, jumping on a bike could be a possible mode of transport if the journey isn’t too far.
If you are a contractor with your own limited company there are 2 options available to you;
(a) Claiming 20p per mile – Similar to AMAPs when claiming mileage completed in your car, you are able to claim 20p per mile incurred whilst cycling to work.
(b) The Cycle to Work Scheme – as you are both the director and an employee of your limited company, the company can directly purchase and provide a bicycle to you as the employee. You save corporation tax on the value of the bike and equipment provided, up to the value of £1,000. VAT can also be reclaimed if you are not on the Flat Rate VAT Scheme. The bike must also be purchased from the company bank account and the receipt made out to the company.
Please note you cannot claim both (a) and (b) and therefore will need to make the decision as to which would be more beneficial. In order to decide you should ultimately calculate how many miles you will be able to claim the 20p AMAP back on, and judge whether this will outweigh the corporation tax saved on the initial purchase of your bicycle.
*Please also note that all of the above will have to comply with the 24 month rule.