What travel expenses can I claim as a director?

What travel expenses can you claim as a director?

Business travel between different work appointments

Travel expenses are allowed if these are incurred in the performance of the duties of the employment, for instance during the working day when the travel is required to the client’s premises. Typical examples are a commercial traveller or a service engineer who moves from place to place during the day carrying out repairs to appliances at clients’ premises.

An example is given by HMRC:
“Tony is a service engineer working for a company that services and maintains white goods for the commercial sector. He visits up to 10 customers each day throughout the UK. He has no normal workplace and is emailed his job list each evening for the following day. Travel is an integral part of his job and he carries out the duties of his employment at each customer’s premises. Tax relief is available for the cost of all Tony’s business travel, including from his home to his first appointment and from his last appointment to his home.”

Business travel between different business activities

A deduction is allowed for travel expenses if the expenses are incurred in the employee’s necessary attendance at any place in the performance of the duties of the employment, sometimes also referred to as travel ‘on the job’.  The most common example is travel between one workplace and another in connection with a single employment.

An example is given by HMRC:
“Amanda is a senior manager in a sales consultancy company. She manages teams in offices in Leicester and Nottingham and is regularly required to travel between the two. Tax relief is available for the full cost of the travel between the 2 workplaces because it is undertaken in the performance of Amanda’s duties. No relief is available for travel from her home to the offices or her return home from the offices as this is ordinary commuting.”

Business travel between different places of work

A place of work has various characteristics such as company’s business address or registered office address are based there, the employee’s base is there, substantial fee-earning activities are performed there, administration and billing of the company are based there.

For a home to be considered a place of work – an employee needs to work there out of lack of choice, meaning there is no alternative place of work where their duties could be performed.

Worth noting is that there is no relief for travelling between two workplaces of different employments unless:

  • the employments are with more than one company in the same group (at least 51% owned)
  • the employments are with two UK companies, the individual is employed as a director of one of them and this is because the other company has a financial interest in that company
  • at least one of the employments is performed wholly or partly overseas

And what travel expenses you cannot claim…?

disallowed travel expenses - accountalitics

Ordinary commuting

Ordinary commuting is ‘travel’ between the employee’s home and a ‘permanent workplace’, or a place that is not a workplace (eg a hotel or someone else’s home) and a ‘permanent workplace’.

HMRC’s guidance says that to get tax relief for business travel, the employee must be able to show that the attendance at the particular place was necessary for the performance of the duties of that employment and was not just a matter of personal convenience. An ordinary commuting journey cannot be turned into a business journey by requiring an employee to stop off on the way to carry out business tasks such as making phone calls.

Travel ‘to’ or ‘from’ the permanent place of work

‘Permanent workplace’ is a place the employee regularly attends in the performance of his duties of employment, and not a ‘temporary workplace’. If the employee spends 40% or more of their working time at the workplace and they are seconded there for more than 24 months, this would be a permanent workplace from the beginning of the secondment and, therefore, the travel costs would not be allowed. If the secondment is intended to last less than 24 months then the workplace would be temporary, and hence, the travel costs would be allowed.

Travel ‘to’ or ‘from’ the place NOT related with work or business.

No tax relief is available for travel that is made for private rather than for work purposes, even if that travel is to or from a workplace which, in other circumstances, would be a temporary workplace, for instance, if the regional manager for a chain of recruitment agencies, Gina has to visit different offices on a regular basis, she gets tax relief for her travel. However, if Gina travels invited to the Christmas parties held at these offices, she cannot get tax relief for this travel because it is not for work purposes.

What about non-executive directors and their travel expenses?

Non-executive directors are regarded as office holders, which means that the same rules relating to travel expenses apply to them as to employees generally. In determining whether tax relief is available for the costs of a particular journey, consideration must be given to whether the workplace being travelled to is a temporary or permanent workplace.

An example is given by HMRC:
“Dinesh is a non-executive director for a large banking group. The main duty of his role is to attend monthly board meetings which he travels to directly from his home. The board meetings are all held at the banking groups headquarters in London. As all or almost all of the time that Dinesh spends working for that employer is spent at a single workplace it is a permanent workplace and no relief for his travel expenses is due”.

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