Blog

Travel expenses – directors & employees

Travel Expenses

The tax treatment of travel expenses can be surprisingly complicated.

The starting point is that employees are entitled to tax free payments for a business journey. The employer can either pay the employee tax free for the cost incurred or the employee can claim for tax relief on any shortfall through their tax return.

The fact that an employee may have made a saving is irrelevant. So if the employee normally drives 10 miles from home to the office but is then required to drive 50 miles from home to a business client, the full 50 miles are claimable, not just the excess 40 miles. The rate of approved mileage allowance by HMRC for employees using their own cars for business travel is 45p per mile for the first 10,000 miles per year and 25p per mile thereafter. It should be noted that this mileage allowance rate includes a certain amount for fuel on which VAT can be reclaimed by the employer when backed with appropriate records.

Travel expensesQualifying travel expenses

You can claim the cost of travel expenses incurred in the performance of your duties or travelling to or from a place you have to attend in the performance of your duties as long as your journey is not ordinary commuting between your home and your permanent workplace or private travel.

Therefore site based employees can claim the cost of travelling from home to site, although this is not allowed if the job at the site is EXPECTED to last for more than 24 months. If the position at site actually lasts longer than 24 months then they fail to qualify from the point at which they knew the 24 months would be exceeded. This should be distinguished from a permanent place of work which does not qualify at any time.

The subsistence expenses such as meals and accommodation in connection with this travel are also allowable. Car parking, toll fees and congestion charges are also allowable.

The fact that an employee may divert for a private purpose such as to do some shopping on the way home does not prevent it being a business journey if the primary purpose was business.

Permanent workplace(s)

A permanent workplace is usually the normal place where the employee goes to work although is actually defined as any place where an employee regularly attends in the course of their duties and which is not deemed to be of limited duration or for some other temporary purpose. It is possible to have two permanent workplaces and as a guide if more than 40% of your time is spent at the second workplace this can become a permanent workplace as well, although it is always necessary to look at the facts of the case. In some cases, spending less than this can also make it a permanent workplace.

Triangular Journeys

Where the employee travels from home to say a client and then to the office then the whole journey will qualify as business travel, which can be beneficial. However, it is important that the primary purpose of this is business and the work related diversion is not done just to claim the business journey.

Use of Home as Office

Aside from making claims for use of home of office, if the employees home can be classified as a permanent workplace on the facts then journeys to the head office should qualify as business journeys.

Record Keeping

Employers should keep records in support of all business travel expenses and subsistence expenses and where possible try to get dispensations for the amount of travel expenses paid agreed with HMRC.

How We Can Help You

We can advise you on the tax treatment of your travel expenses and subsistence expenses. Some cases are borderline and we can help argue your case with HMRC. We can also assist you in applying for an expenses dispensation.

 

 

Disclaimer

 

Fee Calculator

£0

£0
* Required

Fees exclude VAT

What our clients say about us
Iain CowardIain CowardBiggerbet Ltd

Paul did a great job with our accounts. He delivered on deadline with minimum hassle for us. He uses technology very well and this helps provide top-notch service.

see more

Anthony PearceAnthony PearcePearce UK Consulting Ltd
Good accountant with proven electronic processes."

see more

Martin KruusimägiMartin Kruusimägi
It has been great working with Paul. He is punctual and accurate, but I most appreciate the fact that I can go to him with any question, no matter how insignificant or elaborate. Thanks Paul, it's been a pleasure!"

see more

Mike BellMike BellJourneys To Wellbeing Ltd
Paul Colman takes all the pressure off and lets us get on with our work by taking care of the little detail as well as the big picture."

see more

Trevor HolmesTrevor HolmesPrecise Marketing Ltd
I have yet to meet someone as meticulous with numbers and calculations as Paul. An extremely personable individual who knows his work inside-out. He is highly self-motivated, independent and efficient – all the qualities that I look for in an accountant for my business. All of my accounting needs are immediately processed well ahead of schedule. Paul plays a pivotal role in all my financing activities, which allows me to successfully grow my company. He will be an asset to any company that decides to use his services and I recommend him completely for any accounting needs."

see more

Jesús CarreraJesús CarreraBitien Ltd

It took me a while to find an accountant that understands the needs of the modern times. Paul is very good at using cloud systems that reduces unnecessary paperwork (specially in printed form), and accelerate communications. My accounting and bookkeeping is less annoying now. Thanks Paul.

see more

Zafer SaygilierZafer SaygilierSayturk Ltd
I have been dealing with Paul for the past 2 years, he has been amazing sorting out my very complex and disorganised affairs in no time and has provided me with clear advice and solutions tailored to me and my operations . I would recommend him and his professional services to anyone without any hesitation."

see more

This is the first time I have used cloud based accounting. It has been a refreshing change. I found Paul to be extremely helpful in setting things up being a new user. Communication was done by email and i always received a response within a day. Very knowledgeable and excellent communication. And a fantastic bonus was that the service was 1/3 cheaper than what i was paying using a traditional accountant. I would without hesitation recommend Paul. Just brilliant.

see more

D McIvorD McIvorBeyond the Fridge (Frome) Ltd
We’ve been with Cloudbook Accountants for some time now and would highly recommend Paul Colman FCA to any business looking for a truly enlightened advocate of online accounting and integration to online services. Having experienced several accountancy firms during my career, both large and small, I can honestly say that Cloudbook’s holistic approach to our business is by comparison the most efficient and cost effective, something we’ve long been searching for!"

see more

Annie MulvanyAnnie MulvanyFreelance Show Caller

Paul was a delight to work with. Flexible, understanding and endlessly patient; I would recommend him in a heartbeat.

see more

Steven TrotterSteven Trotter
Many thanks for a very fast and professional job and look forward to working with you again."

see more

Gabrielle ShegogGabrielle ShegogSimple Software Solutions Ltd

Paul has been invaluable in providing accountancy services for my small business. As a small business owner, my time is valuable and so it's great having the piece of mind that I can rely on Paul to sort out my accounts for me. He is always prompt and clear in explaining anything I don't understand and I look forward to working with him well into the future.

see more

Jhem MurrayJhem MurrayJeystone Media Ltd
We have used several accounting firms in the past and switched quite a few times, but since discovering Paul Colman FCA I can say with confidence that this is the level of service and value we have been looking for all along.

see more

A CuryA CuryHouse of Greenland Ltd
Since the beginning of our start up and especially during busy and pressuring times, Paul has been by our side to help us dealing with accountancy. His patience with my lack of talent with numbers was amazing - I thank him for that and would recommend him in a heartbeat."

see more

L FergusonL FergusonPaul Ferguson Electrical Ltd
I really appreciate your help, I know we pay you but you have been worth every penny and I am truly thankful for your assistance!!"

see more

Save Tax!

Pay less tax completeSign up for monthly Tax Tips & News emails and receive this FREE GUIDE

*Email:
First name:
Last name:
© 2016 CloudBook Accountants Ltd | Registered in England and Wales 08966635 | Registered Office: 22 Bosworth Gardens, Newcastle Upon Tyne, NE6 5UN
Leave a message: 0191 4065 351 | Email: contact@cloud-book.co.uk | Twitter: @CloudAcountants