When employees are travelling as part of their remit, it is likely that they may incur additional costs, so understanding hotel and subsistence expenses, and how the rules work, is extremely important.
This can include the cost of transport, such as train tickets or fuel, as well as food, drink, parking and toll charges.
Any travel expenses have tax, National Insurance and reporting obligations. HMRC has published guidance for reporting, explaining what is exempt and how to correctly report the costs.
The main thing to consider is if the cost has come as a direct result of your employee travelling for business.
This could include both local and overseas trips and travelling to off-site meetings or events.
HMRC defines business travel as a journey taken as a part of your job which does not include your daily usual commute to and from your home and workplace.
This is something that companies need to have a clear procedure for when claiming and reimbursing costs, as well as clear guidance on what the company will and will not cover when travelling for work.
It is important that employees and employers both have a clear understanding of exactly what can be claimed and how to do so.
Are hotels and accommodation a reasonable travel expense?
If you require your staff to stay overnight when travelling for work, the cost of their accommodation can be tax deductible for your company.
This may be applicable for those conducting business overseas or travelling long distance for client meetings or site visits.
This may me more common with long distance travel or travel for events that last longer that one day, but it is sometimes necessary for those whose business takes them away from the office.
Can I claim food and drink as a travel expense?
The same applies for food and drink, any costs incurred when employees are travelling can be tax deductible. However, this must be within reason. Nights out and endless calls to room service probably won’t be acceptable!
What other subsistence expenses could be covered?
Travel expenses can also include costs such as parking, toll charges and congestion charges in addition to the cost of fuel and train or bus tickets, and these are key elements in understanding hotel and subsistence expenses.
Think what reasonable costs your employee may incur while they are out of the office.
Try to plan ahead as much as possible when it comes to travel expenses. Look into booking accommodation, travel and meals where possible, this will help you to stay on top of the costs and cut down any additional administrative tasks filing and responding to expenses.
Make sure you keep thorough records of all expenses, for your own bookkeeping purposes as well to ensure accurate reporting for HMRC.
Do not hesitate to get in touch with our team if you have any questions about travel expenses, it can be a complex area, but our advisors are on hand to support you.