Travel expenses

Travel expenses

Travelling and accommodation
Travel and accommodation are valid business expenses where they are incurred wholly and exclusively for the business. This can include mileage, public transport, hotels and even food if you are outside your geographical area. There are no limits on the amount you can claim for travel accommodation expenses, but the cost must be reasonable. As a general rule of thumb, if you hired an assistant and would not pay them the expense you wish to claim, it is likely indicative that the expense is not wholly business and would also be denied by HMRC.
 
Commuting costs
HMRC do not allow tax relief for travelling costs to a permanent place of work. It can be challenging to decide if a business trip is commuting or if a contract with a client is permanent in nature.
 
Flat rate expense claims
When working away from home, you can also claim Incidental Overnight Expenses. These are flat-rate amounts of up to £5 per night in the UK and £10 for working abroad, and £25 where travel is at least 15 hours and ongoing after 8 pm. These flat rates cover incidental personal expenses for private items, such as newspapers, telephone calls or laundry.

Travel insurance
The cost of providing insurance for overseas medical treatment is allowable, as is the cost of any medical bills incurred while abroad that would have otherwise been covered by an insurance policy.

Claiming mileage
If you use your personal vehicle, you can claim 45p for the first 10,000 business miles and 25p for each mile after that. The cut-off point for when the 10,000 miles clock ends is the 5 April, regardless of your actual company year-end. So you may incur 10,000 miles in the three months to 31 March 2023 and another 10,000 miles in the quarter to June 2023, all at 45p as it would cover two tax years; 2022/23 & 2023/24.
 
Temporary workplace and the two-year rule
If you are a contractor, you may claim travel for up to two years if you spend less than 40% of your time on that site. Please see our article here on the temporary workplace rules. You can find further information on the definitions of a temporary workplace in the following link, with guidance on the HMRC's website.
 
Food costs
HMRC will deny any claim for food and drink if you are close to your home. They are also much more sceptical of sole director-shareholder food claims. Unless your business travel requires an overnight stay, HMRC may challenge that the food was wholly business. There is a higher bar for claiming food than for travel, and HMRC is vague on what is defined as your 'geographical area'. Please see our article on subsistence and the interaction with entertaining here.
 
Temporarily renting near the workplace
If you are required to travel to a temporary workplace away from home due to work purposes, you may like to consider looking for a rented place to live near the contract work site. The accommodation expenses will be allowable business expenses only if you have another place you keep as your permanent residence. If the temporary workplace is not a significant distance away, then there could be a dispute over whether the rents are allowable.
 
You can rent a flat as an alternative to staying at a hotel. The entire cost of the rent will be allowable as long as there is no 'significant' non-business use of the property, and you can demonstrate that it is much cheaper to rent a flat than pay out for hotels. The non-significant business use would include regular weekend stays and use of the property for short holidays - staying in the accommodation for a long time after the contract has ended would also not be allowable.
 
 

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