claiming business travel expenses uk

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• Money and tax

Claim tax relief for your job expenses

Travel and overnight expenses.

If you have to travel for your work you may be able to claim tax relief on the cost or money you’ve spent on food or overnight expenses.

You cannot claim for travelling to and from work, unless you’re travelling to a temporary place of work.

You can claim tax relief for money you’ve spent on things like:

• public transport costs
• hotel accommodation if you have to stay overnight
• food and drink
• congestion charges and tolls
• parking fees
• business phone calls and printing costs

For hotel and meal expenses, you’ll need to send receipts that include the date of your stay or of the meal and the name of the hotel or restaurant.

You may also be able to claim tax relief on business mileage.

You can claim for this tax year and the 4 previous tax years.

How to claim

Use this service to:

• check if you can claim
• make a claim if you’re eligible

If you complete a Self Assessment tax return , you must claim through your tax return instead.

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Managing business travel expenses

Guide to hmrc subsistence allowance & expenses, what is a subsistence allowance, how do hmrc subsistence rates work.

• The cost of food or drink must be incurred after the business trip has started
• The trip must be beyond their usual commute and be done as part of official business.
• The journey must take the employee away from their normal place of work for 5 hours or more.

Is meal allowance taxable?

• a meal or beverage is not purchased
• the meal does not constitute additional expenditure
• the “staying with friends or relatives allowance” is claimed
• meals have been taken at home
• meals are provided during a training course, conference or similar activity
• meals are provided on the train or plane and included in the ticket cost

What are the HMRC domestic subsistence allowance rates?

• £5 for travel of 5 hours or more (£10 supplement if travel is ongoing at 8pm)
• £10 for travel of 10 hours or more (£10 supplement if travel is ongoing at 8pm)
• £25 for travel of 15 hours or more (and ongoing at 8pm)

Overnight accommodation rate UK

Meal allowance rates overseas, how does a business report subsistence allowance spend.

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Reimbursements

Travel Expenses in the UK: An Overview 

Anyone undertaking a business trip for the employer usually has expenses for this trip – be it for meals, accommodation, or transport. Under certain conditions, these travel expenses are tax-deductible. Our guide reveals which specific conditions apply, which travel expenses can be claimed, and which solutions companies can use to simplify business travel for their employees.

Travel expense policies – this must be considered

In 2020 and 2021, business travel plummeted due to COVID-19. In 2023 we’re seeing business travel return to normal as the effects of the pandemic fade. Although it is unlikely that there will ever be as many business trips in the future as before, there are still issues best discussed and settled in person. Not every social interaction can be replaced by a Zoom meeting. For such business trips, it is crucial to know what the fiscal opportunities are, both for the employee and for the employer.

Travel expenses are usually exempt from tax by HMRC. To claim expenses incurred for tax purposes, corresponding receipts must therefore be kept and submitted. After all, it must be possible to prove these costs. An overview illustrates what kind of travel expenses are affected by the tax exemption.

Tax exemption applies to the following types of expenses in business travel:

• public transport
• hotel accommodation
• food, as well as drinks
• congestion and toll charges
• parking fees
• professional telephone calls
• printing costs

All these sorts of costs can be exempted from tax at HMRC, provided they are incidental to business travel. However, it is not always possible to distinguish clearly between a mere business trip and a business trip with partly private share – or to determine which expenses incurred on a business trip are of a private nature.

Reimbursements with Moss: More freedom for your team

Distinction of business and private travel

For HMRC, there are only two kinds of travel considered to be business travel and which can accordingly benefit from tax exemption: one being trips undertaken by employees in the course of their professional duties – for example, client meetings. The other is travel to some place where their presence is required to fulfil duties – this includes, for instance, visits to construction sites or temporary workplaces, as it often occurs in companies with international subsidiaries.

Please note, however, that the daily commute from home to the permanent place of work is explicitly not considered a business trip. Only travel that goes beyond this regular routine and is consequently of limited duration is considered as such. Furthermore, if a trip is made that actually does not lead to the permanent place of work, but is approximately the same distance, this trip cannot be taken into account for tax purposes either.

The following table provides a clear overview of which expenses on a business trip are of a business and which are of a private nature. A distinction is made between costs that can be exempted from tax and those that are not deductible.

UK travel rules for employees

If the costs of a business trip are incurred by an employee and are not covered by the employer, the employee has the option of reclaiming the taxes from the government. 

There are different requirements to be met:

• The travel expenses exclusively incurred for work-related reasons.
• The employee has covered these travel expenses personally.
• The employer does not reimburse the employee for the travel expenses.
• The employer has not provided the employee with a suitable alternative.
• The employee pays taxes.

The last aspect is especially significant: the regulation involves a tax relief. A tax relief, in turn, implies that taxes are paid in the first place. The relief depends on the amount of tax paid and the tax rate. The relevant expenses and, if applicable, supporting documents must be submitted within four years of the end of the tax year in question.

For example: If travel expenses amount to £60 and the employee has a tax rate of 20 per cent in the year in which the expenses were incurred, then the employee can claim a tax break of £12.

Permanent and temporary workplaces: travelling time is decisive

As mentioned above, a basic distinction must be made between permanent and temporary places of work to determine whether travel expenses can be claimed. What constitutes a permanent workplace is obvious in most cases: the office, shop, or factory where the work is done every day. A temporary place of work, on the other hand, is one that is only visited occasionally or only for a short time before returning to the permanent workplace. The regulation only applies up to a period of 24 months. After that, the place of work is no longer considered temporary and thus can no longer be taken into account for tax purposes.

Corporate travel and expense management: provisions for employers

Employers also have the option of claiming their employees’ travel expenses for tax purposes – provided they have covered their costs. To do this, they must report the expenses to HMRC.

Employers must take certain things into consideration:

• To deduct the costs of their employees’ business trips , these must have a distinct and exclusive business origin and must not serve private pleasure.
• The business trip itself may have a private share – but only the professional expenditure can be claimed for tax purposes.
• If private expenses, such as transport to a private destination, are covered, this is considered employee compensation and is then relevant for National Insurance.
• The expenses for fuel or food are legally set at fixed rates. If the employer reimburses the employee more than these fixed rates, the difference is considered remuneration and thus a kind of wage and is therefore subject to PAYE and National Insurance.

The prerequisite for keeping track of all this and for being able to allocate costs correctly is proper corporate travel and expense management . In combination with accounting software such as XERO, employees’ business trips can thus be easily managed.

Travel expense management: fixed rates and exceptions

Not all expenses are deductible in their entirety. Certain types of travel costs can only be deducted at a certain amount set by HMRC. These fixed rates are intended to prevent business travellers from financing a dissolute life at the expense of the state. These fixed rates apply in particular to meals and fuel.

The first expenditure item for which HMRC determines how much businesses can claim in tax is fuel. Since the efficiency of vehicles may vary considerably, as does the price of fuel depending on the type of fuel, HMRC has set limits up to which companies can refinance the fuel costs of their employees tax-free – for example, on business trips in a company car. Or if employees must repay the employer after private journeys with the company car. In both cases, the advisory fuel rates apply.

These advisory fuel rates are usually adjusted on a quarterly basis, depending, among other things, on the latest fuel price development. Various factors contribute to the calculation: type of fuel, size of the engine, or fuel consumption. The rates can be found on the HMRC website. Currently, they range between 9 and 25 pence per mile travelled, except for electric cars, which are charged 5 pence. 

Costs for Food

The same applies to meals: companies can cover their employees’ expenses and thus save tax. However, HMRC sets limits on the extent to which this is possible. For example, if employees eat a particularly expensive meal, companies do not have to pay the full cost.

You have several options to refinance your employees’ expenses for meals: 

• You bear the costs at the rate set by HMRC.
• You negotiate an individual rate with HMRC if, for example, the company needs to have its employees dine at particularly expensive venues for representative reasons.
• You pay the full cost for your employees but can only deduct it up to the maximum amount set by HMRC.

The amount of the fixed rates for meals depends on the length of the journey.

There is also a cap of £5 for breakfast. For dinner after 8pm the cap is £15, as it is assumed that the employee works longer hours than usual and cannot eat at home.

Moss: travel and expense management made easy

Moss makes corporate expense management much easier. With Moss Corporate Cards , employees can make instant payments on behalf of the company when travelling on business – without having to advance any money – and then reclaim it from the employer later. They can upload the corresponding receipts via the web and mobile app to be stored in the application.

The employer can collate the documents and has access to them whenever they are requested by HMRC. And the accounts department can easily export them to accounting software such as XERO and match them with payments, without having to request the receipts from the employees themselves.

When employees enter their travel data in the application, Moss will also automatically calculate the flat rates and per diems of the trip, depending on the length of the business trip and the destinations. If employees should pay in advance and submit the relevant data to Moss, the employer can reimburse the costs with just a few clicks and immediately credit the employee’s account – or transfer the sum along with the next salary.

Reimburse with Moss: Give freedom to your team

There are several types of expenses during a business trip that may be exempt from tax. These include public transport, hotel accommodation, meals as well as drinks, congestion and toll charges, parking fees, professional telephone calls, printing costs, and mileage. Depending on the specific kind of expenses, they will be reimbursed either in full or at fixed rates set by HMRC.

The rates for meals depend on the length of the trip. From five hours, £5 can be claimed, from 10 hours £10, and from 15 hours £25. For breakfast, a rate of £5 applies, for dinner after 8 p.m. it is £15. Abroad, however, rates vary from country to country and sometimes city to city, depending on the local cost of living.

The fuel costs you can deduct per mile on a business trip in a company car depend on various factors – such as the size of the engine, fuel consumption, and type of fuel. HMRC’s fixed rates currently range between 9 and 25 pence but change quarterly according to the prevailing fuel prices. The fixed rate for electric cars is 5 pence per mile.

Business travel is any travel that serves a distinct professional purpose. These can be short business trips to meet with business partners or trips lasting several weeks that require an employee to work on the go – such trips can be deducted for up to 24 months. Commuting between home and permanent place of work is not considered a business trip.

Various types of travel expenses are tax deductible – from public transportation and hotel accommodations to congestion, toll, or parking fees. The tax exemption is determined by the amount of the expenses. Fixed rates set by HMRC apply to meals and mileage in company cars.

Certain conditions must be met for the reimbursement of travel expenses: The expenses were paid in full by the employees themselves. The costs are work-related and did not serve private pleasure. The employer did not reimburse the expenses and did not offer a suitable alternative. And the business traveller is a taxpayer.

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Guide to business travel and subsistence expenses

• Carrie Stokes

• Disclaimer: This post was last updated on February 28, 2024 so is based on rates, allowances legislation in effect on this date.

When your employees travel away for business purposes, it can be costly, especially when accommodation and food are involved. If you choose to cover the cost of your employees’ business travel, then you will have specific tax and National Insurance obligations to adhere to. But did you know that as a business owner or self-employed individual, you can claim tax relief when covering these costs?

Travel and subsistence expenses are the costs associated with business-related journeys, such as transportation, meals, accommodation and other miscellaneous expenses. Effective management of business travel expenses is crucial to the overall financial success of your business.

Read our in-depth guide below to find out all you need to know about business travel expenses for you and your employees and what can be claimed as legitimate business expenses.

At Spotlight Accounting, we are helping you manage your own and your employees’ travel costs so you can stay as tax-efficient as possible. We’ll guide you through the business costs of work-related travel and how you can make tax deductions on these costs.

If you are looking for  professional business and accounting support , then please  get in touch  with our experts today!

What is classified as a business travel expense?

Business travel expenses cover a range of costs incurred while you or your employees are away for business-related purposes. This means travelling from the regular place of work, such as the office, to another location, either a temporary workplace, to meet with clients or participate in business events.

These costs can include :

• Certain travel expenses, such as train or plane tickets
• Accommodation costs when an employee stays overnight
• Food and drink
• Other necessary costs directly related to business travel

Unfortunately, you cannot claim expenses for employees’ everyday trips to and from their permanent workplace, parking fines, or any non-business-related travel costs.

So, if your employees have recently taken a business trip or are due to take one soon, then remember that many of the costs involved can be deducted. Make sure you keep track of the receipts so that you and your accountant can easily claim expenses when filing your returns.

Does an employer have to pay employees’ travel expenses?

When it comes to business journeys and work-related travel, it is typically the responsibility of the employer to cover any relevant costs incurred. This can vary depending on the work arrangement and employee’s contract.

However, it is usually good practice for employers to arrange transport and accommodation or reimburse employees for business-related travel, as it ensures employees are paid for expenses that benefit the company.

Plus, if you do cover these costs, you are eligible for certain tax deductions, which, in turn, can reduce your taxable profits, and help you attract and retain talent.

In situations where an employer doesn’t cover an employee’s travel expenses, the employee may be able to claim tax relief instead, as long as they meet the specific criteria set by HMRC.

HMRC business travel expenses guidelines

If you are covering the cost of your employees’ business travel, you can claim tax relief on some of these expenses. However, you will need to keep a few things in mind when it comes to HMRC compliance.

Firstly, the travel and subsistence costs must be “wholly and exclusively” for business purposes to qualify. This means they need to contribute to running or developing the business.

Secondly, there are various ways in which you can choose to cover these costs. You can reimburse them for the entire cost of their travel and subsistence, so long as they provide receipts, or you can set a fixed amount they can spend during the business trip.

What if the business trip requires employees to stay away?

When employees are required to stay away for a night or more, they will require overnight accommodation, which is classed as a subsistence cost. As an employer, you can cover these costs and reclaim any tax and VAT on them when filing your returns.

What are subsistence expenses for employees travelling?

When travelling for business-related matters, as a business owner, self-employed individual or employee, you’ll often need to pay for things like food and accommodation to keep you comfortable on your trip. These daily living expenses are known as subsistence.

As an employer, you can cover these expenses for your employees. However, if you choose not to cover subsistence costs, tax-paying employees can claim tax relief instead.

HMRC has set out a handy benchmark for subsistence rates, detailing a fixed amount you can cover that is National Insurance and tax-free.

The UK travel expenses benchmark rates are as follows:

These rates are only in relation to subsistence payments and do not cover overnight accommodation, as HMRC have not yet set a benchmark rate for accommodation expenses.

If you choose to reimburse employees at a higher rate than that set out by HMRC, you may be required to pay PAYE tax and National Insurance on the additional cost.

How much can an employee claim for subsistence expenses?

While there is no limit to how much employees can spend on subsistence, as an employer with a growing business, it may be wise to set an upper limit on the amount they can claim.

It is also vital for employees to keep receipts of their travel costs to show proof that their claim is accurate.

How do you manage travel expenses

Managing travel expenses doesn’t have to be a daunting task. There are many things you can do to ensure you can cover any travel and subsistence costs an employee arranges while reducing the tax and National Insurance impact.

Here are some of our top tips for staying on top of your travel expenses:

• Clearly outline your company’s travel policies
• Use digital tools and accounting software to maintain records
• Utilise corporate discounts when travelling
• Ensure expense reports are accurate and on time
• Stay informed on tax regulations

Get tax advice from Spotlight Accounting

At Spotlight Accounting, we are here to help you understand your company’s finances, guiding you to your full potential. We are a friendly team of chartered accountants dedicated to making our client’s businesses more profitable.

As a team of enthusiastic number-crunchers, strategic minds and tax experts , we’ll help you understand the intricacies of business travel expenses.

To find out more about how we can help you, please  get in touch today !

Frequently asked questions about business travel and subsistence expenses

For more information about claiming expenses on business trips, take a look at some of our FAQs below.

What happens if I lose receipts for my business travel expenses?

As a business owner, you should be well aware of the importance of keeping receipts. Losing a receipt for business expenses when travelling can be frustrating, but you may still be able to claim back some of the costs if your employees can’t provide proof of their expenses.

Ask the employee to gather any supporting documents, such as bank statements and confirmation emails or contact the vendor to see if they can provide a copy of the receipt.

If you cover employees’ travel expenses at the benchmark subsistence rates set out by HMRC, then you may not need to provide a receipt to make a claim.

Is there VAT on travel expenses?

Most travel-related expenses do not include VAT, although some do. If your business is VAT registered, you can reclaim VAT on certain travel expenses, such as plane tickets and hotel accommodation.

What is a per diem expense UK?

Per diem rates or allowances are a fixed amount of money you can pay your employees to cover their subsistence expenses while on business-related trips. It can cover daily costs such as food and other necessary purchases.

As an employer, you can choose the per diem rates you give to employees that fit their travel demands. HMRC also provides benchmark scale rates which cover these costs. If you happen to exceed the benchmark set out by HMRC, then you may be required to pay tax and National Insurance contributions.

Carrie Stokes Chartered Accountant

I work with directors of limited companies in Shropshire , Staffordshire and the West Midlands giving them a clear and up to date financial picture of their business that they understand. Looking at the numbers, what they mean and how they can be improved to grow their business.

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How employees can claim travel expenses.

Claiming travel expenses can be quite a tricky area, but it’s one that affects a large portion of the working population.

Thousands of workers across the UK have to travel in some form or another for work. There are a number of reasons to travel. Whether they’re travelling to visit a client, heading to a conference or simply running errands for the business.

HMRC offers a tax relief for any costs incurred whilst you are on the road for work-related reasons. These are known as travel expenses.

For one reason or another, lots of taxpayers aren’t making full use of this tax relief. Thousands of workers aren’t claiming back the travel expenses that they are entitled to.

So, what exactly are travel expenses? And how do you claim this rebate?

We’ll take a closer look at everything you need to know about how employees can claim travel expenses.

Here’s What We’ll Cover:

What Are Travel Expenses?

What counts as a travel expense, what counts as business travel, what counts as a workplace, can i claim travel expenses if i work from home, how can i claim for travel expenses, how much can i claim, key takeaways.

As the name suggests, travel expenses are expenses incurred whilst travelling. In this case, they are expenses incurred whilst travelling for business purposes. These expenses include transport costs, meals and vehicle mileage among a number of others.

As with all legitimate business expenses, companies and employees are able to claim tax relief on these costs. This is because if the expenses tick all of the required boxes, business travel is free from tax.

This is why it makes financial sense for both companies and individual employees to keep track and claim tax relief on business trips.

HMRC may provide tax relief on business-related travel expenses, also known as HMRC travel expenses , if the costs fall into the following categories:

• Public transport costs
• Hotel accommodation if you have to stay overnight
• Food and drink
• Parking fees
• Congestion charges and tolls
• Business phone calls
• Printing costs

Essentially, as long as any of the above occurs during business travel then the company should be able to claim relief.

According to HMRC, to be eligible to claim for relief if you have to be travelling for a ‘business purpose’.

Simply put, you can claim for any trip that’s outside your everyday commute to and from work. The journey you take to and from work is classed as regular commuting and is not seen as counting as a business trip by HMRC.

You can, however, claim for journeys that fall under a business category. They also require you to travel to a location that isn’t your place of work or your home.

For example, this may mean you driving to:

• An office location that isn’t your usual base of operations.
• An event, such as a work-related conference or seminar.
• A customer’s workplace for a business meeting.
• A training centre for a required training course.
• A temporary separate office if your usual office is out of action.

There are two types of workplaces that are recognised by HMRC. Those are:

Permanent Workplaces

This is judged by HMRC looking at how much of an employee’s time is spent at a particular workplace and if they are regularly there or not.

There isn’t a particularly large requirement for a place being a permanent workplace. For example, if an employee goes somewhere just once a week this is almost always counted as a permanent workplace.

HMRC defines it as:

“If the task is going to last more than 24 months and the employee is going to spend more than 40% of their time on-site, the workplace where the task is carried out becomes permanent.”

Temporary Workplaces

A workplace is defined as temporary if an employee only goes there for a short-term task. Travel to and from a temporary workplace can be counted as business travel, not normal commuting.

This means that you can claim expenses for business travel if you are travelling between both permanent and temporary workplaces.

Since the COVID-19 pandemic, we have seen a huge increase in employees working from home.

According to HMRC, if an employee works from home for no other reason than convenience, then any home-to-work journeys count as normal commuting.

However, if an employee works from home because their job requires them to, then that changes. Let’s say that their employer doesn’t provide the facilities on-site, then your home becomes a workplace. This means that travel from your home to other workplaces becomes business travel.

To claim for travel expenses as a form of relief, you will need to have detailed records to back up your claim. These could include:

• Details of Your Journeys: This may be a diary of locations visited and the dates that you made the trip.
• Pay Slips: If your payslips show your business mileage or lodging costs paid by your employer then they can be used as evidence.
• Receipts for Accommodation: You will need to provide the receipts for travel expenses and/or sustenance expenses.

To claim your travel expenses as an actual expense you have to file a claim with HMRC. You have up to four years from the end of the tax year to claim it.

To make a claim, you must:

• Keep a record of your business-related mileage expenses.
• Multiply your yearly mileage by the current AMAP mileage rate and deduct your employer’s mileage allowance, if any.
• If it is under £2,500, you can file your claim on your self-assessment tax return.
• If your claim is over £2,500 then you must file a self-assessment tax return.

In terms of how much you can claim, it depends on a number of factors:

• How much you have spent.
• How much tax you have paid.
• If your employer has reimbursed you.

There may be a scenario where an employer has paid their employee some percentage of their travelling expenses. If that is the case then they may still be eligible to claim for travel expenses if:

• The allowance doesn’t cover the full cost of your expenses.
• The allowance paid by the employer is then taxed.
• The employee uses their own car and the mileage allowance is less than the government-approved rates.

It’s important for both business owners and employees to know how much they can claim and what they can claim for.

The amount of tax relief you can claim can really add up and make a difference to your overall bottom line. It is a form of relief that any business is entitled to so it should be utilised.

To keep track of your business expenses and business miles, try using expense tracking software such as FreshBooks.

Are you looking for more business advice on everything from starting a new business to new business practices?

Then check out the FreshBooks Resource Hub .

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Claiming Back Travel Expenses from HMRC: A Step-by-Step Guide for Businesses

Are you feeling overwhelmed by the complex rules around HMRC travel expenses ? Unsure about what qualifies or how to claim your travel costs back?   

Our guide is here to clear the fog, providing you with a straightforward path to reclaim your business travel expenses .   

This article will help you navigate the HMRC guidelines with ease, ensuring you get the reimbursements you're entitled to without the stress.  

We'll be covering:

• What Qualifies as HMRC Travel Expenses?
• Reporting and Tax Implications for HMRC Travel Expenses
• Claiming Travel Expenses as an Employee
• Travel Expenses for the Employers
• Per Diem Rates and Meal Allowances: A Guide to HMRC Regulations
• Special Cases and Rules: The 24-Month Rule and Advisory Fuel Rates
• Best Practices for Travel Expense Management
• Streamlining HMRC Travel Expense Claims with ExpenseIn

What Qualifies as HMRC Travel Expenses?  

When it comes to business travel, understanding what exactly qualifies as a travel expense under HMRC guidelines is crucial for businesses in the UK.   

Transport costs : Airfare, train, bus tickets, and even car or van rentals.  

Mileage : If using a personal vehicle, the specific approved amount for HMRC travel expenses per mile can vary.  

Accommodation : Hotel stays for overnight business trips.  

Meals and refreshments : Including reasonable costs for food and drink.  

Additional charges : Parking fees, tolls, congestion charges, and business-related phone calls.  

It's important to note that HMRC focuses on expenses that are "wholly and exclusively" for business purposes. This means personal travel costs mixed with business travel need to be separated.   

Also, ordinary commuting, or travel to and from a regular workplace, doesn't qualify as a business travel expense. This distinction is crucial for financial compliance and accurately claiming expenses.   

Understanding these nuances helps in effectively distinguishing between personal and business travel, ensuring that claims align with HMRC's criteria.  

Reporting and Tax Implications for HMRC Travel Expenses  

When handling HMRC travel expenses, employers are faced with specific reporting requirements and potential tax reliefs, balancing compliance with tax efficiency.  

Tax Relief and Reporting Requirements  

It's imperative for employers to:  

Keep meticulous records.  

Report expenses in detail to HMRC.  

Ensure proper documentation for compliance.  

Understanding Tax-Free Reimbursements  

The criteria for tax-free reimbursements are strict. Reimbursements aligning with actual expenses or HMRC's per diem rates generally remain tax-free.   

Reimbursements over these limits might be taxable.  

Employers should carefully track and categorise these expenses.  

Navigating Private Travel Benefits  

When it comes to private travel, understanding tax implications is vital:  

Transport provided for private use is subject to National Insurance.  

Correctly distinguishing between business and private travel avoids compliance issues.  

By mastering these aspects, employers can effectively manage travel expenses, ensuring they meet HMRC standards and optimise their tax position.  

Claiming Travel Expenses as an Employee  

Travel expenses can be a significant outlay for employees, especially those who travel frequently for work.

Understanding how to effectively claim these expenses back is essential. It not only ensures you’re reimbursed promptly but also helps you stay compliant with tax regulations.  

Eligibility for Claiming Travel Expenses  

Firstly, to claim travel expenses, the travel must be strictly for business purposes. This includes trips to meet clients, travel to a temporary workplace, or attending conferences.

Commuting between your home and permanent place of work is typically not covered.  

Public transport fares  

Mileage costs if using your own vehicle  

Parking fees and tolls  

Accommodation if required to stay overnight  

Meals on overnight trips  

Understanding the Claims Process  

Collecting receipts : Keep all paper receipts and e-receipts from your travels, as these are crucial when submitting your expense report.  

Completing an expense report : Fill out your employer's expense report form, detailing the costs incurred and attaching the relevant receipts.  

Submitting for approval : Send your completed expense report to your manager or the finance department for approval.  

Reimbursement : Once approved, the expenses will be reimbursed , typically through your payroll .  

Conditions for Claims  

To ensure a smooth claims process:  

Submit your claims in a timely manner, adhering to company policy on expense submissions.  

Ensure that your claims are accurate and free from errors to prevent delays.  

Be aware of company limits on certain types of expenses, such as meals or entertainment.  

Use company-preferred booking channels and vendors if required.  

Claiming travel expenses doesn’t have to be complicated. By understanding what’s covered, keeping meticulous records, and following your company's procedures, you can be reimbursed without hassle.   

Always check with your HR department for specific guidelines related to your company's travel expense policy .  

Travel Expenses for the Employers  

Employers should first understand which expenses are considered reimbursable.

These typically include transportation costs like airfare and mileage, lodging for overnight stays, and meals during business trips.   

It’s important to communicate to employees what qualifies as a business travel expense and the limits of these expenses.  

The Reimbursement Process  

Policy communication : Clearly communicate the travel expense policy to all employees, detailing what is covered and the limits on certain expenses.  

Expense reporting : Employees submit their travel expense reports along with the necessary receipts or documentation.  

Review and approval : The submitted reports are then reviewed for accuracy and compliance with company policy before approval.  

Reimbursement : Approved expenses are reimbursed, usually through the company's payroll system.  

Keeping Records and Receipts  

Accurate record-keeping is essential. Employers should keep:  

All receipts and documentation related to employee travel expenses.  

A record of the purpose and business benefit of each expense.  

Copies of all submitted expense reports and reimbursement records.  

Tax Compliance  

It's important to stay compliant with tax laws concerning travel expenses. This includes:  

Only reimbursing expenses that are "wholly, exclusively, and necessarily" for the purposes of the business.  

Using the Approved Mileage Allowance Payment (AMAP) rates when reimbursing mileage, but remember that employees can claim tax relief on any shortfall where they are paid less than the approved amount.  

Per Diem Rates and Meal Allowances: A Guide to HMRC Regulations  

What are per diem rates  .

Per diem rates are daily allowances given to employees to cover expenses incurred while travelling for business. These rates are predetermined amounts covering accommodation, meals, and incidental expenses.  

  You can reimburse subsistence to employees by making a scale rate payment using HMRC's published rates .  

HMRC’s Benchmark Rates for Meals  

HMRC sets specific benchmark rates for meal allowances that employers can pay tax-free without the need for receipts. These rates apply to meals taken during business travel, and the amounts are determined by the length of the trip.   

For example, there is a set amount for travel lasting more than 5 hours, a higher amount for over 10 hours, and the highest rate for travel extending beyond 15 hours.  

If your employee is travelling to a place not shown in HMRC's table of overseas scale rates, you can use the rates for the closest city shown for the country or the geographically closest city if the country is not listed.  

Negotiating and Applying Per Diem Rates  

While employers can use HMRC's benchmark rates, they also have the flexibility to negotiate different rates.   

If employers choose to pay rates that exceed the HMRC benchmarks, employees may need to pay tax on the excess amount. It’s important for employers to:  

Agree on per diem rates with employees as part of their employment contracts or travel policies.  

Ensure that the rates are fair and reflect the actual costs employees might incur.  

Apply these rates consistently across the organisation.  

Conditions for Applying Per Diem Rates  

To apply per diem rates effectively, employers should:  

Only apply them to trips that are solely for business purposes.  

Not pay per diem rates for routine travel between home and work.  

Keep records of the travel dates, locations, and business purpose for each trip.  

Special Cases and Rules: The 24-Month Rule and Advisory Fuel Rates  

The 24-month rule explained  .

HMRC's 24-month rule is an important tax regulation for self-employed individuals and employees who travel for work.   

It states that travel expenses to a temporary workplace are only allowable for tax relief if the engagement is expected to last less than 24 months. If the engagement is expected to, or actually does, last more than 24 months, the location is considered a permanent workplace and travel costs are not eligible for tax relief.  

Applying the 24-Month Rule  

For the application of the 24-month rule, employers and employees should:  

Keep track of the duration of engagements and expectancies from the start.  

Monitor any changes in the contract that could affect the expected duration.  

Maintain clear records of travel expenses and contract details for tax purposes.  

What are Advisory Fuel Rates?  

Advisory Fuel Rates (AFRs) are guidelines set by HMRC for employees using a company car to calculate mileage costs for business journeys. These rates give the amount per mile that HMRC considers reasonable to reimburse employees for business travel in their company cars, without incurring taxable profit and no Class 1A National Insurance to pay.  

AFRs are reviewed and updated quarterly and vary depending on the engine size and fuel type of the vehicle. Employers can use these rates to:  

Reimburse employees for business travel in their company cars.  

Require employees to repay the cost of fuel used for private travel at the correct AFR or higher, ensuring no fuel benefit charge.  

Best Practices for Travel Expense Management  

Here are key best practices to consider:  

Develop a comprehensive travel policy : Clearly articulate what qualifies as a reimbursable travel expense to avoid ambiguity and ensure consistency.  

Leverage technology : Implement a robust expense management system that can handle reporting, tracking, and storing digital receipts.  

Educate your team : Regularly train employees on expense submission procedures and the importance of compliance with both internal policies and HMRC regulations.  

Keep detailed records : Maintain organised records of all travel expenses, including receipts, mileage logs, and expense reports, for a minimum of six years as required by HMRC.  

Stay informed : Keep abreast of changes in HMRC guidelines, including rates and regulations, and update your policies accordingly.  

Review and verify : Conduct regular audits of travel expenses to ensure accuracy, prevent fraud, and assess the effectiveness of your travel policy.  

Promote timely reporting : Encourage employees to submit their expenses promptly to maintain a steady flow of information and facilitate quicker reimbursements.  

Ensure secure storage : Use secure and reliable methods for storing records to protect sensitive information and ensure easy retrieval when needed.  

Streamlining HMRC Travel Expense Claims with ExpenseIn  

Mobile claims : Submit travel expenses directly via the ExpenseIn mobile app , in compliance with HMRC guidelines.  

Receipt scanning : Capture receipts with real-time scanning , ensuring accurate date and amount capture for HMRC records.  

HMRC-approved mileage rates : ExpenseIn automatically applies HMRC-approved rates for mileage reimbursement.  

Audit-ready reports : Generate detailed reports that are ready for HMRC audits with full expenditure visibility.  

Seamless integration : Sync with accounting software to maintain consistent records, essential for HMRC compliance .  

Policy enforcement : Set up expense policies within ExpenseIn to automatically enforce HMRC rules, reducing errors and non-compliance.  

These features combine to provide a robust system for managing travel expenses.   

By aligning with HMRC's standards and providing a platform for accurate and compliant expense reporting, ExpenseIn is an indispensable tool for any business aiming to streamline their expense claims process and ensure compliance.  

Discover the ease of managing HMRC travel expenses with ExpenseIn firsthand. Book a demo now and start making expense management effortless.  

Explore our faster, simpler and smarter approach to expense management.

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HMRC travel expenses: guidelines for business travel & tax in the UK

Published on January 16, 2024

Corporate travel has developed a love/hate reputation. For employees, it's exciting to get out of the office and change up the routine. For employers, travel is a key driver of growth. Meeting prospects and clients in person is still incredibly effective , even if feels a little old fashioned.

So there's plenty to love.

And yet,  managing travel - and especially travel expenses - is nobody's idea of a good time. Particularly when the rules and regulations from HMRC aren't clear to everyone.

So to help, we've put together this guide to travel expenses for UK businesses . Once you understand what HMRC expects (and therefore what you need to do), managing travel doesn't feel quite so painful.

Disclaimer: This is not legal, accounting, or tax advice -  it's simply a guide. If you need help, check with your accountant or contact HMRC directly .

Now, let's start with the obvious question.

What are travel expenses?

As the name suggests, travel expenses are company expenses incurred while travelling . These include transport costs, meals, and vehicle mileage , among others.

And as with all legitimate business expenses, companies may be able to claim tax relief on these costs. If it meets all of the correct requirements, business travel is normally free from tax .

So both for companies and individual employees, it makes fiscal sense to track and claim tax relief on business trips.

HMRC travel expenses: the basics

HMRC may provide tax relief if costs fall into the following categories :

Public transport costs

Hotel accommodation if you have to stay overnight

Food and drink

Congestion charges and tolls

Parking fees

Business phone calls and printing costs

As long as these occur during business travel, the company should be able to claim relief.

So what counts as business travel?

LeeP Financial shares this handy reference guide for company managers and employees:

Part of what makes all this tricky is the overlap between private and business travel . It’s not always clear exactly what counts as each.

Private vs business travel

The distinction between these two forms of travel is a common cause of confusion. It’s simply not always clear cut whether a trip is entirely for personal or business reasons .

There can easily be portions of a business trip that look like personal travel, and vice versa.

According to HMRC, only two types of travel qualify as “business” trips:

Journeys employees make in the performance of their duties (where travel is part of their duties)

Journeys to or from a place they have to attend in the performance of their duties (travel to a place where attendance is in the performance of the duties). This usually means visiting a temporary workplace or site outside of their regular commute.

So if travelling  is  your job, or if you have to visit a specific location in order to do your job, this is business travel.

Crucially, “ordinary commuting” is explicitly not counted as business travel.

Travel expenses for employers

Employers are required to report all travel expenses paid to employees during the year . There are some exceptions to this rule, especially where you’re paying HMRC’s advisory rates, or where you’ve applied for a specific exemption .

A few things to keep in mind :

Some expenses like fuel and meals have fixed rates. If you reimburse employees at higher rates, these become earnings (like salary), and are subject to PAYE and National Insurance.

If you provide extras like transport to employees for private travel , this becomes a benefit and is subject to National Insurance as well.

To be deductible, expenses need to be “wholly and exclusively incurred” for the purposes of running the business or generating more business.

But this doesn’t mean every aspect of a trip needs to be related to business. Bleisure trips are permissible, but only the business aspects of that trip can be deducted .

This should be common sense for most businesses. And as long as good records are kept and there’s a smooth process in place, you shouldn’t have much trouble managing travel .

Travel guidelines for employees

If you travel for work, incur expenses as a result, and these expenses are not reimbursed by your company, you may be able to claim tax back from the government .

To claim tax back for any kind of work expense (including travel), a few conditions must be met:

You personally pay for a necessary work cost

This cost is only necessary for work

Your employer doesn’t pay you back

Your employer doesn’t offer you a suitable alternative

And of course, you also have to pay tax, since this is a tax break.

Claiming travel expenses from home to work

We’ve seen that travel expenses can be claimed if you’re travelling to a place of work. But equally, you can’t claim if your travel counts as commuting. So what’s the core difference?

Permanent vs temporary worplaces

Commuting is the regular travel you make to a permanent workplace . Thus, if you want to claim tax back for work travel, these trips need to be to or from a temporary workplace.

In most cases, that’s going to be pretty simple. If you’re out on a sales call, going to a conference, or visiting another branch of the company, you’re not going to your permanent workplace.

Another little note : if your travel to a temporary workplace is not really any different from your regular commute (in time, distance, or costs), you can’t claim relief for this either. So if you're heading to a client just down the road, this is probably not going to count.

For more details, read the section on "the 24-month rule"   below .

Common causes of confusion

Let’s look now at a few of the most common - and often most confusing - areas for mistakes.

Meals and subsistence rates

Not every single pound, dollar, or euro spent while travelling is going to be reimbursed. That would leave the door open to abuse - Michelin-starred meals and exorbitant bar tabs claimed as “business costs.”

To set clear rules and expectations, HMRC has provided a list of meal allowance rates for different cities and countries . These work like a per diem , standardised for all UK businesses. And they also include the cost of accommodation.

When reimbursing employees for meals, companies have a few options:

Use the set amounts allowed by HMRC

Negotiate another rate with HMRC, if the rates provided don’t meet the company’s needs

Reimburse employees in full, no matter the cost

Note : If your business opts for the third choice, the amount reimbursed will only be tax-free up to amount allowed by HMRC . So you can reimburse at a higher rate if you choose, but you’ll have to pay tax on the difference.

Read our full article on meal allowance rates here.

Alongside meals, HMRC has also standardised the amount companies can reimburse employees for fuel tax-free . This reflects the fact that every car has a different expectation of efficiency, and that fuel prices fluctuate.

Instead of trying to deal with this on a case-by-case basis, HMRC has assigned advisory fuel rates for company travel. These apply in two cases:

When reimbursing employees for work travel done in company cars

When employees need to repay the company for private travel in a work car

In either instance, advisory fuel rates tell companies and employees exactly how much they should expect to pay or receive per mile.

Read our full explanation of advisory fuel rates here.

The 24-month rule

We already wrote a detailed explanation of HMRC’s 24-month rule . It’s a relatively simple test to help you figure out whether a workplace is temporary or permanent . If it’s permanent - as a result of meeting the 24-month rule - employees and companies cannot claim tax relief for travel expenses.

Two key conditions have to be met for the 24-month rule to apply:

The employee must have spent or be likely to spend more than 40% of their working time at a workplace, AND;

They must attend it or be likely to attend it over a period lasting more than 24 months.

So in short, if you spend more than 40% of your time in a single workplace over a 24-month period - that’s a permanent workplace .

There are always complications to these rules, so it’s worth reading that article linked above.

Employed, self-employed, both, or neither?

Naturally, there’s no one-size-fits-all rule for employee travel. Your tax rights and obligations depend on your employment status, among other things.

And - especially in the modern careers landscape - there are whole range of different circumstances that can complicate matter. These affect:

Agency staff billing out time to clients

Employees working through umbrella companies

Contractors working through a limited company for a larger company

“Personal Services Companies” (hairdressers, care workers, and labourers, among others) fall under the IR35 legislation and may have other obligations.

This isn’t the time or place to go into all of these circumstances in detail. This post from the Low Incomes Tax Reform Group does a great job of highlighting the differences.

But to clarify: in this post, we’re mainly speaking to companies and their full-time employees .

Best practices to manage travel expenses

As a bonus, here are a couple tips and best practices on handling travel expenses from around the web.

Contractor Calculator - Keep clear records

Contractor Calculator writes for contractors - obviously. But this advice is valuable whether you’re a sole practitioner or run a company of 10,000:

“Both limited company and umbrella company contractors must retain copies of receipts and tickets , and detailed mileage logs, so that they can prove the journey actually took place if investigated by HMRC.”

And of course, you’ll want those receipts if you have come up against a full on audit.

Spendesk - Automate as much as possible

Aside from misunderstood rules, the biggest issues with travel expenses normally relate to admin. Filing and processing every single expense claim by hand is a huge productivity killer.

When it comes to business travel , the more you can automate your expenses, the better.

This means looking for a good travel and spend management tool , like Spendesk. These let you automate processes, and also build in your company travel policy to keep everyone in line.

Work travel shouldn’t be a bore

For many employees, travelling for work is a great privilege. The chance to visit new cities, meet clients, and have new experiences is too good to pass up. They’re the lucky ones.

Too often, business travel gets bogged down in minutiae . The little things - expense reports and transport issues - can overshadow what should be a break from the norm. Which is a shame.

But with good planning, and better technology, corporate travel goes back to being a benefit. So find yourself a good travel management tool , get a smarter way to track expenses and store receipts, and stop sweating all of those little issues.

You can start with this clever travel planning workbook:

For more information about HMRC's rules and guidelines, take a look at these other recent articles:

HMRC VAT returns: an introduction for UK businesses

UK per diem: How HMRC meal allowance rates work

HMRC mileage allowance: How to manage employee car travel

Expense receipts: What is a valid proof of purchase?

e-Receipts: How to store digital receipts for your business expenses

How HMRC advisory fuel rates work for UK businesses

HMRC Employment Allowance: the rules & how to claim

How HMRC research & development (R&D) tax credits work

More reads on Business travel spend

Work travel management: How to get it under control

VAT and expenses: what UK businesses should know

How to calculate Germany’s per diem rates in 2023 / 2024

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Can My Business Claim Tax Relief on Travel Expenses?

Running your own business usually involves some sort of costs, but the good news is that you can normally claim tax relief against your allowable expenses , including your work-related travel.

For employees this is pretty straightforward – just hand the receipts over to your employer and let them sort it out. For self-employed people it can be a bit more confusing, so we explain what travel expenses you can claim for, and how to claim.

Is it worth claiming expenses on my tax return?

Yes! As a business owner you can, and should, claim for business expenses. HMRC tax businesses on their profits, not their income, so deducting your allowable expenses from the income you earn helps reduce your tax bill.

The key word here is ‘allowable’ expenses. Travel costs can count as a business expense, but there are limitations as to what types of travel you can include.

What travel expenses can I claim?

The golden rule with any type of expense is that it’s “wholly, exclusively and necessary” for the business. You can claim for travel costs, but only if they’re business related. No school runs and shopping trips on HMRC, we’re afraid!

Commuting costs versus business travel expenses

It’s absolutely crucial that you make sure you can distinguish between a commute, and a travel expense, because commuting costs are not an allowable expense.

• The journey you make from home to the business premises, workshop, or job site you normally operate from is a commute, and you can’t claim for it
• A journey you make in the course of running your business, such as to attend a meeting or a training course is an allowable expense that you can claim tax relief on

The 24-month rule for contractors

The whole ‘no claiming for commuting costs’ is a bit more complicated if you’re a contractor who needs to travel to the client’s workplace every day.

To try and keep things fair, HMRC allow contractors to claim travel expenses for the journey from their home to the client’s premises, but only if it’s a ‘temporary workplace’, which is where the 24-month rule comes in .

The location is only classed as a temporary workplace if the contractor will be there for 24 months or less. For example, if you sign up for an 18-month contract to work out of your client’s offices then you can claim the travel costs as an expense. But, sign on for a 30 month contract, and you can’t.  

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What counts as a travel expense?

If you can only claim for business-related travel expenses, what does this actually apply to? Some examples of what you can claim for include the following:

• Mileage, normally worked out using either a fixed rate per mile, or you can work out the actual cost
• Repairs and servicing for a vehicle, though this may not be the case if you also use the vehicle for personal travel as well
• Vehicle hire or leasing charges , though you may only be able to claim for a portion of this if it’s a long-term hire
• Car parking charges, but you will need to keep receipts
• Public transport such as travel by bus, train, air or taxi, as long as you have receipts or invoices
• Tolls and congestion charges

How do I claim my travel expenses?

You’ll need to include the total amount of expenses you’re claiming on your tax return – the type of tax return you fill in depends on the structure of your business. For example, a sole trader will include their expenses on their Self Assessment tax return .

You won’t need to hand over the proof of your expenses with your tax return, but it’s important to keep hold of any supporting evidence anyway. There’s always a chance that HMRC will decide to carry out a compliance check !

Learn more about our online accounting services by calling 020 3355 4047 and get an instant online quote .

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About The Author

Lisa Hinton-Hill

I've worked in the accountancy sector for more than 15 years, and have extensive experience supporting sole traders, partnerships, and SME's. Learn more about Lisa .

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How to Claim Business Travel When You’re Self-Employed

Navigating the world of tax deductions can be a challenge, especially when you’re self-employed. One area that often causes confusion is business travel.

How do you determine what’s allowable and what isn’t? Here, we’ll explore the intricacies of claiming business travel expenses for the self-employed in the UK.

1. Understanding “Wholly and Exclusively”

The bedrock principle of UK business expenses is that they must be incurred “wholly and exclusively” for the purposes of the trade.

This means any expense claimed should be directly related to the business and not have significant personal use.

2. What Constitutes Business Travel?

Business travel, in the eyes of HM Revenue & Customs (HMRC), refers to journeys you undertake to fulfil your business duties or anything necessarily incurred as part of the performance of those duties.

This can include:

• Visiting clients or customers.
• Travelling to business meetings, conferences, or training courses.
• Going to a temporary workplace if you have more than one location.

3. What Can You Claim?

Here’s a breakdown of potential business travel expenses:

• Vehicle Costs : If you use your car or van for business travel, you can claim a mileage allowance (the rates are periodically updated by HMRC). Alternatively, you can claim the actual costs of fuel and maintenance, but this method requires meticulous record-keeping.
• Public Transport : Bus, train, tram, taxi, and airfares that are directly related to your business can be claimed.
• Accommodation : Hotel or B&B costs are allowable if your business trip requires an overnight stay.
• Meals : You can claim food and drink expenses when you’re on a business trip, but they should be reasonable. Extravagant or lavish meals may be questioned by HMRC.
• Parking and Tolls : Charges related to business travel, like parking fees and road tolls, can be claimed.
• Other Travel Costs : This can include things like congestion charges or necessary business calls made during the trip.

4. Record Keeping is Essential

For all business expenses, including travel, it’s crucial to maintain detailed records:

• Keep all receipts or invoices.
• Note down the date, purpose, and destination of each journey.
• Maintain a mileage log if claiming vehicle costs, detailing the start and end points of each trip, the purpose, and the miles covered.

5. Beware of Mixed-Purpose Trips

A common pitfall is journeys that combine business and personal activities. If a trip has a dual purpose, you can only claim the business portion of the expenses.

For instance, if you travel to a city for a business meeting but extend your stay for sightseeing, you’ll need to split the costs and only claim the business-related portion.

6. Regular Commuting is Not Business Travel

Travel between your home and your regular place of business generally isn’t seen as business travel by HMRC.

However, there are exceptions, such as if your home is your primary place of work and you’re travelling to a client or a temporary workplace.

7. Seeking Expert Advice

Tax regulations can be intricate, and what’s allowable can sometimes be ambiguous.

If you’re unsure, consult with an accountant or tax advisor experienced in self-employed matters.

Claiming business travel expenses when you’re self-employed can be a valuable tax-saving measure, but it’s vital to ensure you’re adhering to HMRC guidelines.

By understanding what’s allowable, keeping detailed records, and seeking expert advice when needed, you can navigate the realm of business travel deductions confidently.

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A guide to claiming legitimate business expenses 

Find our what you can claim for on expenses

This handy guide to business expenses will tell you everything you need to know about making a claim and how much your employees could be entitled to

According to a survey from The Accountancy Partnership , 81 per cent of small business owners don’t understand what is and isn’t a legitimate business expense.

A significant 65 per cent had failed to claim on an expense in the past, meaning that they lost between £100 and more than £10,000. In fact, 35 per cent lost out on an estimated £100-£499.

Employees can make a claim against their place of work for expenses incurred exclusively as a result of carrying out contracted duties. HMRC defines this form of business tax relief as the use of your personal savings for travel or items you must purchase for your job.

Staff may not use this as an opportunity to claim back money for things they have purchased outside work or money they have spent on things like office furniture , stationery or even company assets if you as an employer have already provided them with an alternative.

So what employment expenses can your staff claim back?

Many people are simply in the dark as to what they can make a claim for and do not ask in fear of getting on the wrong side of their employer. Employees should ensure they are not out of pocket by claiming for expenses they have incurred as a direct result of their contracted duties. Here’s what your staff need to know what they can make a claim for, and exactly how much they could be entitled to.

Mileage and travel costs

If you are in the B2B industry, it’s likely that your employees will spend a large percentage of your time on the road visiting clients, delivering pitches and securing deals. With so much time spent on the road, it’s important that employees are not unnecessarily dipping in their pockets for travel expenses.

For those of you who use your own vehicle or motorcycle to travel to work every day, you could be eligible to claim for Mileage Allowance Relief. To work out how much tax relief you are legitimately owed, add up your business mileage for the year and multiply it by the approved mileage rates.

Tools and equipment

If you are expected to purchase tools in order to carry out work-related tasks, then you too could be entitled to a tax rebate. If you were an employed mechanic, for example, you would have to spend a significant amount of money on tools needed to complete a job, including various sized spanners, sockets, jump leads, spark plugs and other equipment You can usually claim back tax relief worth 18 per cent of the value of these items.

Uniform tax relief

Are you tasked with the laundry and upkeep of a company uniform? If you are required to wash a dedicated work uniform or protective clothing, you can also claim back a working tax rebate for expenses incurred carrying out additional work.

Professional fees

For some jobs it is essential that you sign up to a professional registration and/or a special license that allows you to legally practice your profession. While not mandatory, your employer might advise you to become a member of a professional body. These are both examples of subscriptions that are likely to include an annual payment of some nature and for this you may be entitled to a tax relief.

This list is not inclusive of all work-related expenses you may claim back with tax reliefs available for employees working from home , who may be eligible to claim back expenses for internet charges, telephone calls, heating and more.

How to make a claim to HRMC

So you’ve done your research and are ready to make a claim for employment expenses, but how do you go about it? If you have calculated your allowable expenses at a total of £2,500 or less, you will need to present a written record of all expenses as evidence of your claim.

However, if your expenses exceed the £2,500 mark, you will need to fill in a self-assessment tax return. There are sections within this form that you are required to fill in with details including your mileage expenses, as well as your annual income working for your current employer.

There are various expenses you may claim back using the same form and if your details fit the above criteria, you will be considered for a tax rebate with the approval of the HRMC.

All the areas covered in the article require close attention. You could be missing the opportunity to make a legitimate claim for business expenses or risk getting in trouble with your employer for claiming disallowed items. For this reason, it’s always best practice to seek advice from a professional with expert knowledge and experience in accepted tax rebates.

Compare expense management software

If you want to simplify your company expense process, there’s a number of software tools that could help make life easier for you and your employees. Compare providers now to find the perfect option for your business.

Further reading on expenses

What expenses can i claim through my business.

Ben Lobel was the editor of SmallBusiness.co.uk from 2010 to 2018. He specialises in writing for start-up and scale-up companies in the areas of finance, marketing and HR. More by Ben Lobel

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Existing Clients

Opening times, foreign business travel: expenses and allowances explained.

We’re living in a global economy, and if you want to grow your business fast, foreign clients can be a great source of income, as well as a great excuse to see the world. With the increase in people becoming self-employed and online work becoming the norm, there’s never been greater potential to source work from overseas .

Sometimes a big business deal needs a personal touch, and that usually means hopping on a plane to shake some hands in foreign lands. Most business owners will have their domestic business travel sussed – save your taxi receipts, claim your business miles etc. – but international business travel has a few quirks you need to know about.

The same rules apply

HMRC’s house rules for claiming business expenses – that they must be “wholly and exclusively” for business purposes – apply wherever you are in the world.

The requirement to keep proof of purchase is also a worldwide one, so be sure to look up “Can I have a receipt, please?” in your phrase book before hopping in that taxi in Shanghai.

Foreign travel will provide a great opportunity to let your hair down and enjoy a few sangrias by the pool – but the taxman never takes holidays, and if anything, HMRC’s eligibility requirements for allowable expenses abroad are even more strict than at home.

Don’t mix business with leisure

HMRC’s concept of “duality” means any whiff of personal benefit will render foreign travel inadmissible as a business expense.

Want to delay your flight home by a few days so you can take in the historic gothic architecture of Bremen after the 7th International Offshore Wind Power Substations Conference ? Nein! (No) that would mean you can’t claim it back.

Want to bring your spouse along to Stockholm so they can enjoy the hotel gym while you go to Wikimania ? No longer an allowable expense, kompis (for the non-Swedish speaker that means buddy in Swedish!).

It’s not impossible to enjoy a bit of leisure time when travelling overseas for business, but HMRC’s rules are strict and there has to be a clear divider when you close your laptop and open up your Lonely Planet.

Our hapless turbine engineer travelling to Bremen could book outward and return tickets separately, and the conference accommodation and the leisure days as two distinct bookings. They’d then claim for the outward flight and the conference accommodation, and pay for the rest out of their own pocket. Sehr einfach (very easy)!

The enthusiastic Wikipedian travelling to Sweden? Book the spouse’s travel separately, put them up in a different hotel and they’re bra (good!).

A tremendous hassle, but those are HMRC’s rules. Generally speaking, if an invoice , bill or receipt has spending for personal benefit on it, you can’t claim it back.

Spending money

Once you’ve actually arrived at your destination, HMRC’s rules on what you can claim are a little more straightforward.

You can treat foreign expenses exactly as you’d treat domestic spending – just keep the receipt and claim the whole amount back.

If you lose your receipts or want to keep things simple, the taxman has a handy (if huge) list of subsistence rates for every country on Earth , including major cities. It’s important to note these rates aren’t allowances – you can only claim the amounts prescribed by HMRC if you actually incur expenses up to that amount.

If you travel regularly, you’re probably used to juggling exchange rates, and they can make claiming expenses tricky. A €30 taxi ride could cost £20 when you take it, £21 when it comes out of your bank account, and £22 when you come to claim the expense in your accounting software. If in doubt, always use the amount that left your bank account – it’ll make your bookkeeping that much simpler.

It’s almost impossible to go on holiday and not return with a bag full of tourist tat. If you plan to purchase something a little more substantial than a fridge magnet, you can take advantage of lower prices abroad to purchase assets for your business – as long as you pay the correct taxes.

Many countries will allow foreign visitors to reclaim sales tax, either when they leave the country or when they buy (many large malls will have tax reclaim counters). If you purchase a business asset – for example a camera, laptop or some other sizeable piece of equipment – you can reclaim the sales tax. You’ll need to declare the asset when you return to the UK and pay any applicable VAT , but if you’re Standard VAT registered you can reclaim that on your next return.

You’ll save your business a tidy sum, and your new purchase will probably prove much more useful than a bottle of Absolut Vodka and a Dala horse .

If you’re looking for more information on what expenses you can claim then our articles “What expenses can I claim as a limited company?” or “What expenses can I claim as a sole trader?” should be just what you need. Alternatively, for freelancers who prefer their home comforts, we've got a guide on working from home tax relief too.

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UKRI business expense claims, business travel and subsistence policy

Policy statement.

This policy covers business travel, associated subsistence rates and general expense claims. It sets out the importance of employee safety and security when travelling in the course of UKRI business and the methodology for how employees should consider their travel needs. The policy confirms that contracted procurement channels (the UKRI travel providers and arranged contracts in place for other items and services) should be used in the first instance and the UKRI Guidance on When and How to Travel outlines the exceptional circumstances when it is appropriate to use an alternative method.

UKRI is funded by the taxpayer and therefore employees should consider the value in money spent and reflect on whether this is an appropriate use of public money and only claim where this is appropriate to do so. Employees should be aware that from time to time UKRI may be required to disclose information on travel bookings, subsistence costs and expense claims.

All those travelling on UKRI business are firstly expected to consider whether the trip is necessary and if so, travel arrangements should consider the 4 key travel factors:

• health and safety, wellbeing and security
• environmental impact
• cost as a public funded organisation
• business needs

UKRI remains committed to the safety and security of its employees. Employees should consult UKRI’s Travel Risk Management Provider – International SOS – for any travel outside of the UK. Employees will not be required to travel to high risk locations against official advice or if they have wider concerns or considerations.

This, and all HR policies, must be read and implemented in conjunction with the associated guidance documents (Guidance on When and How to Travel and Guidance on Travel Standards, Subsistence and General Expenses), in addition to other UKRI policies that may be relevant. This document is available in alternative formats for accessibility purposes – please contact [email protected].

Management statement

The travel, subsistence and expenses policy has been agreed with the UKRI Trade Union Side. It complies with both statutory legislation and HM Revenue and Customs requirements. For the purposes of this policy the use of the word ’employee’ covers all UKRI employees, including those employed on temporary or fixed term contracts.

It is expected that where UKRI is paying for travel, subsistence and expenses for non-employees the same policy principles and guidance should be applied. For advice on the application of the policy or the associated documents contact the HR Operations team or local HR team in Innovate UK, centres, institutes and units.

This policy is owned by the HR Policy Team and the content has been developed in conjunction with the UKRI Environmental Sustainability Team, UKRI Finance and UKRI Procurement, UKRI Security and UKRI Health & Safety. An equality impact assessment has been completed to ensure that this policy and associated guidance documents do not discriminate against anyone and that they promote where possible equality of opportunity.

1. Approval and review

1.1 This policy is owned by the UKRI HR Policy Team and content is provided across UKRI teams where appropriate including Environmental Sustainability, Finance, Procurement, Security and Health and Safety.

1.2 This policy is formally approved by the UKRI Joint Negotiating and Consultative Committee.

1.3 This Policy (including the rates detailed in Annex B) will be regularly reviewed to incorporate legislative change but otherwise at minimum of 2 years or at the request of the Trade Union Side.

1.4 The next scheduled review is September 2024.

2. Reporting and management requirements

2.1 Council Chief Operating Officers and members of the UKRI People, Finance and Operations committee will be provided with travel booking information (quarterly from the procurement team) and emissions data (quarterly from the Environmental Sustainability Team) to monitor the impact of the policy.

2.2 UKRI Environmental Sustainability Delivery Group will review business travel emissions data against targets and is responsible for reporting against Greening Government Commitment targets to BEIS on a quarterly basis.

2.3 As noted above, UKRI may be required to report externally on travel bookings and expenses.

3.1 This policy will allow employees to claim reimbursement of reasonable expenses necessarily incurred when travelling on UKRI business and sets the expectations for such claims. It will also provide information on general employee expenses for items which are unable to be procured through the UKRI procurement processes.

4.1 This policy applies to anyone travelling or claiming reimbursement of expenses incurred as part of UKRI business – this includes all travel associated with our work including for research, engagement, recruitment and operations. UKRI employees should consult the HR Policy Framework. Non-employees who claim travel, subsistence and expenses through UKRI are expected to follow this policy, including consideration for the travel hierarchy, but have a separate claims system in place. For more information on this please discuss with your UKRI contact.

4.2 Business travel is defined as all travel incurred in the course of carrying out your role at UKRI. Normal commuting such as travel between home and your contractual site is excluded from the policy, however, there may be instances where this can be claimed such as on-call claims.

5. Principles

5.1 Employees should neither profit nor suffer a financial loss while undertaking UKRI business.

5.2 Employees should ensure that prior to arranging travel they consider whether the same outcome could be met through virtual attendance (such as dialling in remotely via tele- or video-conferencing).

5.3 When travel is required to meet business needs, employees should consider 4 key travel factors before booking travel:

• Health and safety, wellbeing and security
• Environmental impact, supported by the travel hierarchy
• Business need

5.4 Reasonable (sensible and proportionate) travel and subsistence costs necessarily incurred will be reimbursed by UKRI – wherever possible receipts should be provided.

5.5 The typical rates applicable in the UK are included in Annex B, or, in the case of expenses when travelling outside of the UK, this is within the maximum limits set by the HMRC’s scale rate expenses payments.

5.6 Employees with additional requirements, for example where there is a disability, wellbeing, safety or security consideration, should request and agree reasonable adjustments with their line manager where necessary to ensure they feel safe and able to perform their duties.

5.7 Claims made outside of the policy and guidance may be investigated.UKRI may not pay such claims and where fraudulent activity is demonstrated the employee may be subject to disciplinary proceedings.

5.8 Employees should follow the latest UKRI procurement Policy and processes when:

• Arranging travel – employees should book through the UKRI Travel Providers
• Procuring items or services – should be procured through the relevant procurement system such as the Science Warehouse or dedicated contract.

5.9 If the supplier/contract is unable to meet the business need approval should be sought to purchase the item through the General Procurement Card (GPC) or employee expenses. In emergency situations this is not required.

5.10 Purchases of gifts for colleagues as part of occasions, including but not limited to retirement, leaving, sickness or parenthood, is specifically exempt. These should be funded through collections/donations with other colleagues. For further information on Gifts and Hospitality such as items required for cultural reasons please refer to the Gifts and Hospitality Policy.

5.11 UKRI is prepared to consider a claim for compensation from an employee who has suffered damage to, or loss, of their personal property, provided the damage or loss occurs on UKRI premises or while on official duty.

5.12 Local council or site policies and expenses rates are not permitted, however, there may be additional guidance available locally to support the operational implementation of the policy, such as local travel approval and booking arrangements (travel bookers).

6. Responsibilities

6.1 Employees are responsible for:

• considering whether travel is necessary
• making sensible, reasonable decisions before and during travel and ensuring their personal safety and security. Concerns should be raised to their line manager/health & safety/security at any point. Personal safety and security of employees remains the key factor in all decision making
• claiming non travel related expense appropriately and in line with procurement policy
• understanding the policy and asking for support when necessary

6.2 Line managers are responsible for:

• discussing and agreeing travel arrangements (including alternatives to travel) with employees in line with local operation procedures referencing the 4 key travel factors
• reviewing the detail of expense claims including checking the receipts provided to ensure they are accurate to the amount claimed and ensuring the costs have been appropriately incurred on UKRI business
• challenging claims where appropriate and approving in a timely manner
• line managers cannot approve claims which include expenses they have personally benefited from (for example, if they were present and part of the employee’s claim for a meal)
• seeking further guidance from their own line manager or HR if they are unsure as to the application of this policy and associated guidance

7. Travel booking and approvals

7.1 Before booking any travel, employees and line managers are expected to consider whether an equivalent outcome could be delivered virtually. This could mean attending meetings remotely via video or tele conferencing options or opting to attend webinars and virtual events.

7.2 Normally, travel for UKRI business must be approved by the line manager prior to being booked in line with local operating procedures, unless in exceptional circumstances where travel changes are required at short notice.

7.3 Employees and line managers must give consideration to each of the following factors when considering their travel plans:

7.3.1 Health and safety, wellbeing and security UKRI expects employees to make travel arrangements which prioritise their safety and security; and to take account of any reasonable adjustments they require. It may also be appropriate to make adjustments to support employee wellbeing. For travel outside of the UK employees must consult the iSOS for travel advice prior to travel, raising any concerns with the Security Hub. A risk assessment should be completed when travelling for work purposes – more information is available in the Guidance on When and How to travel on UKRI Business and through your local health and safety team.

7.3.2 Environmental impact of the travel Employees are encouraged to follow a ‘virtual first’ approach unless it can be demonstrated that there is a business need to travel. If travel is required the travel hierarchy below should be followed to consider lower carbon emitting options first:

• Virtual first and smarter meetings: considering video conference or phone as the first-choice alternative to travelling. Making the most out of meetings e.g., through efficient preparation
• Active travel: travelling by bicycle or walking
• Public transport: travelling by bus or rail etc.
• ULEV/pool vehicles: ultra low emission vehicles including hybrid pool, electric and rental vehicles. Car sharing when you can
• Private car: staff member owned vehicles
• Air: travelling by aircraft

Further information and examples are detailed in the supporting guidance.

Employees who travel by air are required to provide written justification and obtain authorisation from their senior leadership – UKRI Band H or equivalent band (delegated to Band G or equivalent where appropriate) prior to bookings being made. The approval process will vary by site/council and will likely either be by email or travel approval process. Minimum justification requirements are set within local operating procedures.

Operational flights, such as those at NERC which are required to directly undertake or support scientific activity or in the field training can be approved in bulk.

Domestic mainland UK flights are discouraged unless for operational or wellbeing reasons. Where practicable, international rail services (such as Eurostar) should be used for travel to and from European destinations.

Employees are expected to travel in standard or economy class unless there is a justification for an increased class of travel to account for health and wellbeing needs. If employees are required to use a higher class of travel this should be done at the minimum level required to meet their needs for the trip – meaning premium economy should be considered before business class.

7.3.3 Cost Cost of the travel options is 1 factor but is not considered the primary factor when making travel decisions. Employees are encouraged to ensure that they look at budget options where available through the UKRI approved travel providers and book travel in advance where possible to get best value for money.

7.3.4 Business Needs Needs such as the need to attend meetings which may fall outside of working hours, meetings for urgent or sensitive matters and door to door travel time considerations.

7.4 The weighting of these factors will vary by employee and on each trip made. Employees and line managers should consult the case studies provided in the supporting guidance and the frequently asked questions for examples of considerations to help further inform and support their decision making.

8. Submitting expense claims

8.1 UKRI employees should submit expenses claims on the system with the relevant supporting documentation within 60 days of the date incurred and have them approved prior to their last date of employment.

8.2 Line managers should review expense claims in a timely manner and discuss concerns with employees prior to approval.

9. Travel and subsistence claims

9.1 Employees may claim for reasonable incidental costs incurred in the course of UKRI business. Examples include non-alcoholic drinks such as tea and coffee when not taken alongside a meal, or for paying for toilet use in stations. Employees should claim for actual spend on a receipted basis where possible, however, it is recognised that sometimes this may not be possible (for example, when using a vending machine or station toilet). Items less than £5 may be authorised without a receipt in these instances provided these are considered reasonable. UKRI will not normally pay for alcohol costs unless as with prior authorisation and as part of an external event.

9.2 In exceptional circumstances, employees who are going on an extended visit can request an advance payment of anticipated travel and subsistence costs.

9.3 Employees travelling outside of the UK should discuss and agree with their line manager how they will claim for subsistence costs – whether this will either be on a receipted actuals basis or if more appropriate, to claim the standard HMRC daily rate for subsistence costs.

9.4 In the exceptional circumstances where employees have been unable to book travel through the UKRI Travel Providers this should be put through the system as receipted actuals. A justification as to why it was not possible to use the travel provider should be included with the claim.

10. Non-travel expense claims

10.1 It is recognised that there may be certain items that employees are unable to order goods or services through the UKRI procurement system. Under these circumstances employees are able to claim expenses through the system when these have been agreed with the line manager in advance and on a receipted basis.

11. Detached duty

11.1 Where employees are required to work in a different location to their contractual base at the request of UKRI, reimbursement can be made for excess travel and subsistence costs for attendance at that site.

12. Information governance

12.1 As a public sector organisation UKRI may be required to publish information relating to expenses claimed. This information will normally be in an aggregate or summary level, however, where individuals may be identified from the data, UKRI will where possible give claimants the opportunity to comment prior to disclosure. This will not prevent the disclosure of factual information. Receipts and supporting documentation may be disclosed as part of the publication request.

12.2 Information including receipts and supporting documentation will be retained on the system in line with the UKRI data retention schedules.

13. Third party and external provider expenses

13.1 Travel, accommodation, subsistence and expenses may be funded or provided by another organisation. Claimants are still expected to follow the expectations set out within the UKRI policy and supporting documentation.

13.2 Employees should not accept any offer of payment, in cash or otherwise, by another organisation for expenses which have been paid, or are due to be paid, by UKRI.

Annex A: definitions

Travel providers: This refers to the contracted providers who are contracted to provide travel solutions for UKRI. This includes the central UKRI travel contract, car hire companies and the contract for provision of flights to The Antarctic.

The system: For employees within UKRI supported through UKSBS this refers to the Oracle system. Innovate UK employees should use Workday.

ULEV: Ultra low emission vehicles including electric vehicle, less than 50g CO2e/km.

Operational flight: Operational deployment international flights are defined as those required to directly undertake or support scientific activity or ‘in the field’ training. Non-operational flights include flights for conferences, meetings and non-operational training activities.

Annex B: expense rates

Cars and vans.

• Each business mile within the first 10,000 business miles in tax year: 45p
• Each business mile over 10,000 in the tax year: 25p
• Per passenger per business mile for carrying fellow employees in a car or van on journeys which are also work journeys for them: 5p

Motorcycles

Each business mile: 24p

Each business mile: 20p

Only an economy ticket is permitted unless there are additional requirements as part of a reasonable adjustment or welfare consideration.

Underground and metro fares

These services can be booked through the travel provider as part of a rail journey. When claiming for fares directly such as using a contactless card (including Oyster Card) the actual travel cost per journey will be reimbursed on a receipted basis.

Loyalty points awarded by airlines

Points accrued through official travel for UKRI: these points must be used to offset the costs of future official journeys, and not for personal use. Employees cannot specify a particular supplier to gain air miles or loyalty points.

Fees required as part of a visit outside of the UK

Fees applied for as part of official UKRI business: these will be reimbursed on production of a receipt. This includes items such as:

• vaccination costs
• testing requirements (for example, Covid testing for entry)
• currency fees

Vehicle hire

Claimants should use the UKRI’s recommended service for booking a hire car. UKRI pool cars should be utilised first and then UKRI contracts should be utilised before booking a private hire vehicle. Actual cost reimbursed on a receipted basis for a journey made as part of UKRI business.

Actual cost reimbursed on a receipted basis.

Parking, congestion charges, ferries

Actual cost reimbursed on a receipted basis for journeys which qualify for mileage allowances.

Fines or costs relating to traffic offences (for example speeding, parking, clamping, congestion charge fine etc.)

No payments will be made under any conditions.

Meals in the UK

• Breakfast meal limit (where not included in accommodation): £7.50 inc. VAT
• Lunch meal limit: £15 including VAT
• Main meal limit: £25 including VAT

Subsistence outside of meals

Reasonable costs on a receipted basis, excluding alcohol costs.

Accommodation rates in the UK

• London and Edinburgh (including breakfast): maximum £170 including VAT per night
• elsewhere in the UK (including breakfast): maximum £120 including VAT per night
• staying with friends or relatives (only available for employees, this must be paid via payroll with completion of the form on The Source and not through the expenses system): flat rate £25 net per night

Overseas expenses

Scale rate expenses payments: employee travelling outside the UK. Actuals up to the limits set in the HMRC scale rate expenses payments. This is inclusive of additional extras including tips but excludes alcohol costs.

Additional or late attendances at work

Travel between home and contractual place of work. This is the responsibility of the employee and will not normally be reimbursed.

Cancellation charges

If the employee was unable to book through the provider and unavoidably had to cancel. Actual costs when supporting information is provided. The claimant must also support the recovery of costs through the UKRI Group Travel Insurance Scheme.

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