Understanding how to handle travel expenses for work is crucial for both employees and employers. Whether you’re a workforce traveller or a travel manager, knowing what expenses you can claim and how to do so correctly can save time and money – and make sure that all is above board when His Majesty’s Revenue & Customs (HMRC) comes to call.
Business travel spending in the U.K. is predicted to reach £1.1 trillion in 2024, so it’s never been more important to know the rules – and keep your travel as tax-efficient as possible.
In this blog, we’ll take you through the nitty-gritty of travel and business expenses and what you can claim back from HMRC. We’ll cover the HMRC mileage rates, look at what is covered by the term ‘travel expenses, and introduce RoomexPay as an easy way to manage expenses on the go.
Let’s get started.
TL;DR
- Travel expenses are costs incurred for business-related travel, including transportation, accommodation, meals, and other incidental expenses.
- These can be managed through per diems or reimbursed for specific expenses.
- Business travel must be solely for work purposes, distinct from personal or mixed travel, such as ‘bleisure’ trips.
- The HMRC mileage allowance compensates for business travel in personal vehicles at specific rates.
- Self-employed individuals can also claim allowable trip expenses.
- Roomex simplifies travel expense management through a centralised booking platform and prepaid debit cards.
What are travel expenses?
Travel expenses are costs incurred while travelling for business purposes. These expenses are necessary to facilitate work-related activities that take place away from the usual place of work. Managing these expenses can be done in two different ways:
- Per diems provide a daily allowance for travel and subsistence costs. These are either daily rates set by HMRC or bespoke rates negotiated by a business with HMRC when the scale rates are not sufficient for the business travel purposes. The per diem rate an employee can claim depends on the duration of their business trip and the number of meals they require as a result.
- By claiming specific expenses and getting reimbursed. While these expenses may be unlimited, claiming expenses in this way can leave your workforce traveller out of pocket until the next pay run.
Examples of trip expenses include:
- Transportation (train tickets, flights, car hire, fuel).
- Accommodation (hotel stays, B&Bs, self-catering apartments).
- Meals (breakfast, lunch, dinner).
- Incidental expenses (parking fees, tolls, business phone calls, entry tickets, and more).
What counts as business travel?
HMRC travel expenses rules state that to deduct trip expenses, the travel must have a business purpose. Business travel encompasses all trips taken solely for work-related activities. This includes visiting clients, attending conferences, going to meetings outside your permanent workplace, or going to job sites. These trips must be necessary for your job and not just part of your daily commute.
The key difference between business and personal travel is the purpose. Business travel is for work tasks, while personal travel is for leisure. Mixing the two can lead to complications in expense claims.
Particularly tricky to manage expense-wise are bleisure trips, travel that combines a leisure element within a business trip. These are growing significantly. 46% of full-time workers anticipate taking a bleisure trip in 2024. This might encompass extending the duration of a business trip to include leisure time, or making the most of a corporate travel destination by planning evening outings, theatre visits, and more. You cannot claim expenses for those activities.
So, which expenses are deductible for tax purposes in the U.K.? And which aren’t. Here’s our handy guide:
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You can claim tax back on these expenses: |
You can’t claim tax back on: |
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Travel that isn’t your daily commute to your permanent workplace. |
Your usual daily commute to and from your permanent workplace. |
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Food and drink you consume during business travel – not your usual commute. You can claim a day rate, or the actual expense for this. |
Penalties and fines. This includes things like parking fines or speeding tickets. |
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Overnight accommodation in hotels, motels, B&Bs, and self-catering apartments during your work trip. |
Travel costs that aren’t directly related to a business purpose. This could include costs of bleisure travel. |
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The cost of dinner and breakfast if you are staying overnight. Again, this can be on a day rate, or you can claim actual expenses. |
Accurate documentation and record-keeping are vital. Keep receipts, note dates, and log the purpose of each trip. This helps you make legitimate claims and avoids issues with HMRC audits.
What is HMRC mileage allowance?
The HMRC mileage allowance compensates employees for using their personal vehicles for business travel. It's important because alongside paying for your fuel, it helps cover the cost of things like wear and tear on your car.
When can you claim mileage allowance? HMRC rules:
- If you’re driving from your permanent workplace to meet clients or conduct site visits.
- Travelling between two temporary workplaces – i.e., conducting multiple site visits as an engineer.
- Travelling from your home - if that’s your permanent place of work - to another temporary workplace, i.e., to make a site visit or meet clients.
Current mileage rates
- Cars and vans: 45p per mile for the first 10,000 miles, 25p per mile thereafter.
- Motorcycles: 24p per mile.
- Bicycles: 20p per mile.
- Passenger payments (cars and vans): 5p per mile per passenger carried for business purposes.
You do not pay tax if you are reimbursed mileage at or below the HMRC standard rates.
If you are reimbursed for mileage over the HMRC rates, then any additional mileage will be taxed as income.
How to calculate and claim mileage allowance
To calculate your mileage allowance, multiply the number of business miles by the applicable rate. For example, if you drive 12,000 miles in a tax year, the calculation would be:
- First 10,000 miles: 10,000 miles x 45p = £4,500
- Remaining 2,000 miles: 2,000 miles x 25p = £500
- Total mileage allowance: £5,000
You can claim this allowance through your employer as Mileage Allowance Payments (MAP). If your employer reimburses you at a lower rate or not at all, you can claim the difference from HMRC as Mileage Allowance Relief (MAR).
Why is it important to track business mileage accurately?
Keeping a precise and timely mileage log helps you stay compliant and avoid tax unnecessarily. Your mileage claim log should include:
- Date and purpose of each journey
- Distance travelled
- Start and end points, including full addresses and postcodes
Accurate records help you claim the correct allowance and avoid issues with HMRC.
Can I claim travel expenses if self-employed?
Absolutely. Even though you’re self-employed, you’re still running a business, and you can still deduct what HMRC calls ‘allowable expenses’ from your taxable profit. Expensing mileage and other travel expenses for work can help you keep the tax bill down. However, there are specific guidelines you must follow.
You can deduct travel-related costs including:
- Vehicle insurance
- Repairs and servicing
- Fuel
- Parking
- Hire charges
- Vehicle licence fees
- Breakdown cover
- Train, bus, air, and taxi fares
- Hotel rooms
- Meals on overnight business trips
However, you cannot submit claims for:
- Non-business driving or travel costs
- Fines
- Travel between home and work
What are the HMRC rules on deducting travel expenses if you’re self-employed?
HMRC has clear rules about what constitutes an allowable expense. To be deductible, the expense must be solely for business purposes. Personal travel costs are not deductible. If you’re combining leisure with a business-related journey, then you might need to sit down with your accountant to quantify what proportion of your expenses can be deducted from your taxable business profit.
For car, van, or motorcycle expenses, you may use the flat rate method, known as simplified expenses, to calculate your deductions based on mileage instead of tracking actual costs.
What are the benefits of using Roomex to manage your travel expenses?
At Roomex, we aim to simplify the process of managing business travel expenses, making it easier for your finance teams to keep on top of expense claims and making sure your employees are never out of pocket.
Here are a few of the ways booking business travel through Roomex helps ease the load:
- Enhanced visibility: Overcome the lack of transparency in company spending and improve reporting accuracy.
- Allowance options: Simplify on-the-road expenses with a range of allowance options through RoomexPay, our prepaid debit card and payment app.
- Efficient reconciliation: Reduce the time spent reconciling end-of-month expenses and eliminate the hassle of out-of-pocket expenses for employees.
- Pay on account: Make all bookings on account, avoiding using personal or company credit cards.
- Save Up to 12%: Roomex users can save up to 12% on travel bookings.
Knowing When and How To Deduct Travel Expenses
You can deduct travel expenses for business purposes, such as mileage or train tickets, as well as necessary accommodation and meals, provided they are not part of your daily commute. Remember to keep accurate documentation to support your claims to avoid any issues with HMRC.
Roomex simplifies managing these expenses with options like RoomexPay, which allows your employees to spend on a prepaid debit card or app on the go.
