We are often asked by our clients which of their travel expenses are tax deductible and how much can they claim. Out of their regular commute, accommodation costs on a business trip, or even drinks at the airport, what can they claim for?
Here is our short guide to explain what you can and can’t claim for when travelling. Bear in mind, this is just a brief outline – if you want more detailed advice get in touch with your chartered accountant or you can give us a call.
In general, expenses ‘wholly, exclusively and necessarily’ incurred in the general course of business are allowable. With regard to travel and subsistence expenses, tax reliefs are only available on the cost of business journeys ie when you are required to travel somewhere that isn’t your office – your daily commute is not allowable. (Your commute is defined as the journey from your home to your permanent workplace.)
If on an allowable business trip you decide to use your private vehicle you can claim mileage to cover your costs but as a rule private journeys are not allowable.
So what can you claim against?
You are entitled to tax relief on all ‘necessary’ costs of travel. We’ve compiled a list of some examples:
- Train, coach or tube fares
- Hotel costs, food
- Toll and parking fees, congestion charges (but not parking fines!)
- Business phone calls
You can’t get tax relief for costs such as newspapers or phone calls that are not directly related to the business journey.
Do you have employees who have a lot of business travel to do? There may be some national insurance costs on top of any reimbursed expenses. If your employee is paid in excess of the total of their receipts that money is considered earnings – so there will be tax and NICs due on it.
Example: Katy’s employer pays her £40 to purchase a train ticket to go to a business meeting. Katy chooses to take the bus instead which only costs £10. The excess £30 is considered earnings unless Katy returns it to her employer.
If your employees use a private vehicle for business travel there is an allowable amount that they can be reimbursed using HMRC’s mileage rates:
First 10,000 miles – 45p per mile
Thereafter – 25p per mile
First 10,000 – 24p
Thereafter – 24p
First 10,000 – 20p
NB, you can pay above these rates but it will be regarded as earnings.
Incidental Overnight Expenses:
You can claim for personal ‘incidental’ expenses when staying overnight on business, for example making private phone calls. HMRC will allow you to pay up to £5 a night or £10 outside of the UK without incurring NICs or tax.