ULEZ and Commute Expenses Warning

As Mayor of London, Sadiq Khan defended the expansion of the Ultra Low Emissions Zone (ULEZ) across the whole of greater London today with many dissenters, HMRC has confirmed that self employed and employees that pay this charge wholly in connection with their trade will be able to reclaim the cost as part of business expenses and for employees also if their employer does not refund these expenses.

Qualifying, newer vehicles will not have to pay the ULEZ daily charge but vehicles that are non-compliant will pay at least the standard charge of £12.50 per day with a higher charge for non-compliant vehicles over 5 tonnes.

Warning on Travel

• The key and our warning here is that the journey must be wholly in connection with trade.
• This means your daily commute to and from work does not count and the ULEZ charge is then an expense that cannot be offset againts your tax bill.

This follows HMRC’s stance for other vehicle expenses

• Parking costs when you commute to work are not allowable.
• Parking expenses when ‘out and about ‘wholly in connection with the trade/business journey are allowable expenses
• Fuel/mileage costs when you commute to work are not allowable.
• Fuel/mileage when ‘out and about ‘wholly in connection with the trade/business journey are allowable expenses

Comment

Do not fall foul of this.  You can offset ULEZ, parking and travel expenses when the journey is solely in connection with trade e.g., driving from your place of work to a client’s premises and back to your place of work is allowable but a commute from your home to your place of work or a commute from your home to your client’s premises should only be claimed for additional travel costs or other expenses that exceed your normal commute costs to and from your place of work.