Travel expenses are costs incurred by an employee whilst travelling on behalf of their company, which is away from their usual place of work.
Employees can claim tax relief for the money spent on:
- Vehicle mileage
- Parking fees
- Food and drink
- Public transport costs
- Hotel accommodation if you have an overnight stay
Employers are required to disclose all travel expenses paid to their employees throughout the year.
Companies should be able to claim tax relief on travel expenses, if they are connected with a business justification. It is also required to provide and keep these expense receipts.
The expenses would then be reimbursed by the company once an employee makes a claim.
Some expenses like meals and fuel have fixed rates with the HM Revenue & Customs (HMRC). These standardised rates are in place to avoid employees abusing the system and paying more than what is deemed necessary.
If employers choose to reimburse employees at higher than the standard rates, these become earnings and are subject to National Insurance and PAYE.
Employees may be able to claim tax relief if you use cars, vans, motorcycles or bicycles for work. However, this does not include regular commuting to and from work, unless it is a temporary place of work.
More employees are working remotely, so it is important to ensure mileage expenses are correctly claimed.
HMRC uses standardised amounts for reimbursing employees for fuel tax-free. The rate reflects that every car differs in terms of efficiency, and the fluctuating fuel prices.
Depending on whether you are using a personal or company vehicle for the purpose of work, the amount you can claim differs.
If an employee uses their own vehicle for work, they may be able to claim tax relief on an approved mileage rate. This covers the cost of running and owning the vehicle.
Whereas, employees can claim tax relief on the money they spend on fuel and electricity, for business-related trips in a company car.
For more advice on travel expenses, get in touch with our expert accountants today.