If your business requires you to work away from home and there is a need to stay away overnight, there are expenses that you can claim as tax deductible. These include accommodation costs such as hotel bills and meals. If the cost of these is borne by the worker and they are not reimbursed then they can claim for these as a deduction against their income on their tax return. If the employer pays for them, then they will be a tax-deductible expense in their accounts.
Personal incidental expenses of up to £5 per night if in the UK, or £10 if abroad can also be claimed. This will cover such costs as newspapers, telephone charges, and mini-bar costs that may appear on a hotel bill. The amount per night is taken as an average over the whole period away, and thus it is not a problem if some of the days exceed this amount. If the average is not below the permitted amount, and the difference is not reimbursed, then the whole amount paid would be taxable pay for the employee.
A word of caution – you cannot simply pay the employee the above sum tax-free. The payment is only tax-free if it is made wholly and exclusively for the purpose of defraying expenses that are incidental to the employee being away from home. It is thus far safer to let the employee incur the expenses, and then claim them back, rather than simply paying a regular amount per night and hope to be able to substantiate the basis of the payments if challenged by HMRC probably several years later. You would have significant difficulty in doing this.
If you would like to know more about deductible expenses, please do not hesitate to contact us.
Recent Comments