Online business communication has certainly proved its worth in the past couple of years but that doesn’t mean that business travel to visit clients, attend conferences and create new business leads is not a valuable business tool.
For many employees, getting out of the office on a business trip is a great way to develop skills, meet new people and change the routine. Meeting prospects and clients in person is still an effective way to do business. However, “I love managing my business travel expenses” is not a phrase you hear around the office, ever!
The first challenge is understanding exactly what HMRC expects – what is acceptable and what is not. Travel expenses can cover public transport, hotels, meals, congestion charges, parking and tolls, and mileage within a framework that can be tricky to decipher. When it meets HMRC criteria, business travel should be free from tax.
Recording business travel
The biggest issues with travel relate to its admin. There are good travel management tools now available to track your expenses, store receipts and make the process smarter and more consistent across the organisation as you can set spending limits.
Employers must report travel expenses paid to employees each year if they do not meet HMRC rules on tax deductibility. To be tax deductible, the expenses must be ‘wholly and exclusively’ incurred for the purposes of running the business or generating more business. Where a ‘bleisure’ trip takes place, only the business part can be claimed.
Accommodation and meals
Another area for confusion is where to stay and eating out on a business trip. To reduce abuse of the system, HMRC provides a list of meal allowance and accommodation rates for different cities and countries, like a standardised per diem rate.
Companies can reimburse employees at the set HMRC rate, negotiate another rate with HMRC or reimburse employees in full.
Fuel rates
HMRC also has standardised fuel rates that reflect the efficiency of different cars. Advisory fuel rates are used to reimburse employees for travel in a company car.
A good mileage app to track your business journeys is a helpful tool. Mileage trackers work out your distances and log them in a tax-friendly way that can be used on your return. An app will use GPS to record your journey when the car is moving but double check the distances for accuracy.
There are plenty of mileage tracker app options available but do your research as some are more suitable for different ways of recording and have features that might be useful for your business. Accounting software such as Quickbooks has a built-in mileage tracker so you may already have access.
Travel claims for employees
Certain expenses that aren’t covered by an employer, can be claimed directly by employees to offset their taxable income if they have paid personally, if the cost is only necessary for work and if the employer doesn’t offer an alternative.
As with all tax matters, keeping good records is the secret of business travel expenses success. If you have any questions about what travel expenses you can and can’t claim, please call the friendly experts at CRM on 01865 379272 and we’ll be happy to assist you.