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Travel & subsistence expenses for limited companies – directors and employees

Some people might consider working late a small price to pay if their other half lacks culinary skills. One of the most troublesome areas for expense claims relates to what company directors and employees can claim as travel and subsistence expenses. Geoff's employer requires him to travel to a company branch in Karratha for two working weeks in every four. The taxman will also seek to restrict or completely disallow relief if you are accompanied by your family. You do not have to declare the allowance as income in your tax return if all of the following apply:. You might have to apportion your costs of financing, holding and maintaining accommodation you purchase or rent see Costs you can claim if either:. By continuing to browse the site you are agreeing to our use of cookies.

Working at home You may be able to claim tax relief for some of the bills you have to pay because you have to work at home on a regular basis. You cannot claim tax relief if you choose to work.

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Where you as a director or employee are sent to a temporary workplace from your usual base of operations for many months, this new workplace may still be treated as a temporary workplace if either:. Susie works in Poole. Her employer sends her to Bristol for 1 day a week for 26 months. You may not have a permanent or normal place of work and actually work at a number of different places for several days, weeks or even months. If you fall into this category your travel and subsistence can be reimbursed to you by your company tax free and it obtains a tax deduction for this cost if the period spent at each site is expected to be, and actually is, less than 2 years.

But be careful, the taxman has rules to prevent you abusing this tax break - you cannot simply take a series of recurring temporary appointments in order to claim the relief. This is because the taxman regards you as travelling on your work instead of travelling to it , from the moment you leave your home. You must be able to demonstrate that there is an actual requirement for your work to be performed at home rather than elsewhere. If you can show that this is the case, then the cost of any trips between your home and any other workplace for the same employment will be tax deductible.

However trips between your home and a temporary workplace see above will be allowable. If you have a permanent base for example an office that is separate to where you live then any travel between home and that base is regarded as ordinary commuting and will not be tax deductible.

If you carry out your business from home then you should be able to claim the cost of travelling between your home and where your work is carried out. If you're an employee or director using your own car for business purposes you can charge the company for the business mileage which you do.

If you'd like more guidance as to how to apply these rates, have a look at our blog here. If you have a car with a cc petrol engine, the fuel portion of the mileage rate is 13p per mile as at June In addition to expenses relating to your car running costs, the company can also claim any parking fees, motorway tolls and congestion charges if these relate to business trips.

The company can also claim VAT on these expenses as long as they are business related. The company can also claim bus and train fares incurred by directors or employeess in the course of travelling for business.

Make sure your subsistence expenditure is reasonable though, as HMRC may question bills for dinner at The Ivy restaurant washed down with Cristal Champagne. HMRC have published a list of advisory scale rates which your company can use to make day subsistence payments to you as their employee.

Again your company can claim a tax deduction for this expense. A dispensation short-circuits this process, and reimbursements of expenses covered by a dispensation need not be reported to HMRC. I explained this to the expenses guy who had phoned me to query my claim, and he immediately backed down, explaining that the size of the bill had led him to suppose I must have been entertaining at least one guest at my table.

Reassured that the cost was due to my gluttony rather than my hospitality, he approved the claim. Agreeing rates for round-sum allowances with HMRC has up to now been fraught with difficulty.

Employers who pay these rates must still get a dispensation for them, but the official they have to deal with will have been instructed not to quibble if they stick to the published rates. This can be paid to an employee who has to make an unusually early start defined as before 6am to get to wherever he is going. Note that it does not apply to one who regularly has to leave home at that hour, such as a shift worker. This is payable if the employee is away from his normal place of work for over 5 hours.

Once again, if you regularly work late, this allowance does not apply. With this good news comes some bad. This applied if the employee stayed the night with a friend or a family member, and was a round sum allowance which required no evidence of expenditure actually incurred.

The good news is that if you already have it in your dispensation, you can continue to pay it until your dispensation comes up for review. There is of course one exception to the withdrawal of this nice little earner.

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As an employer paying your employees’ travel costs, you have certain tax, National Insurance and reporting obligations. This includes costs for: providing travel reimbursing travel accommodation. Meal allowances are a valid expense for contractors – when it is a travel expense. To be allowable a meal allowance has to be an expense of travel. You can claim for a meal allowance or actual meal costs whilst you are working at a remote site, away from your normal place of work. • HMRC thinks that self-employed people renting property on longer-term assignments away from home should not be able to claim tax relief for their accommodation expenditure. Both the lower and upper tax tribunals disagreed with HMRC, in a .