It is very common to travel for business and hence HMRC have give us rules on what they consider reasonable expenses for an employee to incur or be reimbursed.  These reasonable expenses are tax deductible on the business and tax free for the employee so good to claim.

Reasonable Employee Expenses

Firstly

Actual costs, evidenced by receipts, for

• Transport – Train, tax, Bus, Air fares, Car hire etc
• Other necessary costs – Parking, Tolls, Congestions charges, Airport taxes
• Accommodation – Hotel, B&B etc
• Subsistence (if more than 5 miles/hours away from base) – Meals (including up to a bottle of wine per person) and coffee stops etc

 

Alternatively

HMRC have given us benchmark scale allowances that may be claimed instead of actual costs

UK Subsistence

If travelling in the UK then the following allowances may be claimed per day instead of actual costs of subsistence: –

£5 if over 5 hours away from base

Or        £10 if over 10 hours

Plus     an extra £10 if either of the above extends after 8pm

Or        £25 if over 15 hours and extends after 8pm

Overseas Travel, Accommodation & Subsistence etc

If travelling aboard, then HMRC have given us a whole range of travel, accommodation and subsistence scale rates – specified in local currency, per city.  We can pick and choose elements to claim instead of actual costs or, using hours in the country, claim the total offered per 5,10 or 24 hours.

For full list please visit https://www.gov.uk/guidance/expenses-rates-for-employees-travelling-outside-the-uk

Plus

On top of actual costs incurred (or the benchmark scale rate allowance alternatives) there are other allowances that may be claimed.

Business Mileage

1. If making the business journey in your own vehicle then you may claim mileage from home or base, at mandatory rates as follows:-

• In a car or van the rates are 45p per mile for first 10,000 mile in the tax year and 25p per mile thereafter,
• On a motorcycle 24p per mile
• On a bicycle 20p per mile

1. If carrying business passengers, then a further 5p per mile may be claimed per business passenger
2. If traveling in a company owned or hire vehicle then mileage may be claimed at Advisory rates (unless the company is playing for fuel); these change every 3 months and can be found at

https://www.gov.uk/government/publications/advisory-fuel-rates

Overnight allowances

HMRC recognises that you may be incurring additional incidental costs when away on business such as a phone call home, a nightcap, newspaper or forgotten toothbrush etc.   Accordingly, there is a tax-free limit or allowance for such costs.

However, if these limits are exceeded then the whole amount becomes taxable not just the excess.  It is therefore recommended that employees claim the tax free allowance and that no actual incidentals are included on the hotel bill or paid for by the employer.

These allowances are as follows: –

• £5 per night for overnight stays anywhere within the UK

• £10 per night for overnight stays outside the UK

Reasonable Expenses for the Self Employed

Regrettably HMRC is not so generous for the self-employed, who may only claim travel and subsistence costs when making business trips outside the normal working pattern as follows:

1. Mileage at cost or 45p per mile for first 10,000 mile in the tax year and 25p per mile thereafter
2. Actual costs of travel and accommodation
3. Actual costs of meals on the job – not between jobs