When working away from home, you will probably incur costs for your business travel and subsistence expenses like food and a hotel – you are human after all! The good news? HMRC recognises these business expenses as being tax-deductible for Limited Company employees and contractors, if their contract is found to be outside of IR35.
What is classed as a subsistence allowance?
A subsistence allowance is money that your employer gives you for expenses incurred working away from home on a business trip. For this, HMRC has outlined the types of expenses that your employer should pay.
- Accommodation for overnight stays
- Paying or reimbursing travel expenses
- Subsistence costs such as meals and business phone calls
However, business travel and subsistence expenses can only be claimed if:
- You made the journey for business purposes
- You actually spent money on the expenses
- You can provide receipts.
Some expenses can be claimed without receipts, read on to find out more.
What is the meal allowance for employees?
For certain subsistence expenses, you don’t have to provide receipts to claim tax relief, for example, food and drink. Here, you can use the HMRC subsistence scale rates for your claims without prior permission from HMRC.
The daily rate depends on the length and start/end time of the business trip. The current rates for subsistence are:
- Breakfast rate: You can claim up to £5 per day for your breakfast for trips when you were required to leave much earlier than usual or before 6:00am.
- One meal rate: If your trip away last for 5 – 10 hours and you return to your permanent workplace or home before 8pm, then you can claim a meal allowance of up to £5 -e.g. you can use it claim lunch expenses.
- Two meal rate: You can claim up to £10 per day for trips away that last 10 hours or more, returning to your permanent workplace or home before 8pm.
- Late evening meal rate: If you work away for more than 5 hours and you return after 8pm, then you can claim £5 or £10 depending on the length of your trip, plus an additional £10.
Please bear in mind that subsistence rates don’t apply if your trip requires you to stay overnight. In this case, you can follow the overnight rules that we explain in detail below.
What is the overnight allowance for employees?
When you stay overnight, you can claim an overnight allowance for costs such as hotel stays. Additionally, HMRC outlines ‘Incidental Overnight Expenses’ for personal items such as newspapers and laundry, which allow you to also claim back these types of expenses.
The current rates for these are:
- £5.00 per night for overnight stays in the UK
- £10.00 per night for overnight stays outside the UK
It’s important to remember that if you spend more than these limits, the whole expense becomes taxable, not just the excess. For example, if you’re in the UK on a business trip and spend £7 per night on laundry, then the whole amount is fully taxable.
This counts for the whole period of time that you spend away and not just each separate night. For example, if you are away for 5 nights and your employer pays you a £50 overnight allowance, then the whole amount is taxable. It makes no difference whether you spent less than £5 some nights.
Are there any other travel expenses I can claim?
Apart from subsistence and overnight expenses, employees and self employed can also claim other types of business travel expenses, as long as the journey is made ‘wholly and exclusively’ for business purposes:
- Business Mileage – HMRC has set mileage rates that you can use to claim mileage expenses tax-free, regardless of whether you drive a company or privately owned vehicle.
- General Business Travel Expenses – Other travel expenses are also deductible, such as parking fees, tolls, and even public transportation costs.
How can I learn more about mileage claims?
There are a lot of HMRC rules to understand when it comes to recording business mileage and managing mileage claims. Reading through all the information on different websites can get confusing, which is why we have put together a complete guide to mileage claims, and as well a list of the 9 best mileage tracker apps in the UK, where we go through everything that you ought to know.
Top Tip! How can I increase transparency over my travel expenses?
Here at Autotrip, we’ve developed a solution that automatically tracks mileage so you don’t have to waste time with manual logbooks and spreadsheets.
Our plug and play GPS tracker records every business trip that you make and our software lets you attach receipts and relevant documents to your mileage claims. It’s the easiest way to organise all your business travel expenses in one place without worrying about losing receipts.
Our software also automatically calculates the claimable amount on business mileage which you can then send directly to your company via Autotrip.
Find out how we make mileage simple at autotrip.com and see how we’ve recorded over 7.8M miles and 482,000 business trips in the past year, saving our clients 1000s of hours that would have been otherwise spent logging mileage manually.