Travel seems to be back on the agenda for almost everyone now, including business. It’s also coming towards the season of celebration, so entertainment is now a hot topic too. So it feels like the right time to talk about all things travel and entertainment and what you can and cannot claim as a business owner.
Let’s start with travel…
What is business travel?
Business travel is classified as you being away from your usual place of work or, if traveling is part of your work, that counts too. Let’s look in detail…
What counts as business travel?
- If you rent an office, your mileage to and from that office is NOT allowable as its your regular place of work,
- But trips not to your office, such as to visit a client, your accountant or to go and buy stationery IS allowable,
- If you travel as part of your work, eg, sales, that travel IS allowable.
Are you keeping up?
How to claim your business travel as an expense
- Keep and submit train tickets/bus tickets etc to your accountant to set against your tax returns,
- If using your own vehicle for travel, record the mileage - the date, where you went and number of miles, using the following tariff:
Car/Van
45p per mile first 10,000 miles
25p per mile over 10,000 miles
5p per mile for a passenger if they are also employee of the business
Bikes
24p per mile for motorbikes
20p per mile for bicycles (this one is little known and a potential great perk!)
What is interesting to note is that these mileage rates haven’t changed for the last 12 years and given the crazy prices of fuel this year, it’s kind of surprising that there is no discussion about this.
It might be useful to know that many digital accounts software packages include a mileage tracker for this purpose. We are big fans of Xero.
Claiming for a Business Vehicle
If you have a work dedicated vehicle such as a van you can claim the full costs (petrol, mot, road tax, insurance, servicing, repairs etc) against your tax return. Simply submit all the invoices/receipts to your accountant.
Claiming food expenses when traveling
If you are working away from your usual place of work you can claim your food costs, but they must be “reasonable”. It’s hard to define reasonable but you can be sure that a meal of lobster and caviar is probably going to be knocked back as unreasonable so you need to apply some common sense here,
However, if you are working locally or from your normal office, your lunch is sadly not tax deductible. Neither is your coffee from Costa, sorry to disappoint,
But if you have traveled away from home for work purposes your food IS allowable.
Claiming for entertaining
Entertaining clients
Entertaining clients, which is often an important part of business, you may be surprised to learn, is NOT tax deductible.
You may pay for it from your business bank account and include it in your profit and loss account so that you can track how much you spend, but the cost must be added back to your profit to calculate your tax payment due. So you cannot even use the expense to reduce your profit calculation.
Entertaining staff
Staff are those who are employed by your business and paid via the payroll. If you are a sole trader or partnership you are not classed as an employee so you cannot claim to be entertaining yourself of course.
You can provide entertainment to your employees in the form of an annual event such as a christmas or summer party and the total cost per head is no more than £150. If the cost goes even 1 penny over the £150, then none of it is allowable. The event must be open to ALL staff
Now beware… if the entertainment does not meet the above conditions then it becomes a taxable benefit to the employee, which probably won’t make you a popular boss.
We have a specific blog post that covers all the details of Christmas entertainment here which you may find very helpful.
Now, interestingly the cost of rewarding employees for good work or to keep up morale is classed as employee entertainment and IS tax deductible. Woop!
However, if your employees are hosting an event or entertaining clients then the cost is not allowable.
Company Directors with no other employees
The costs of entertaining directors only with no other employees is NOT tax deductible. However, Directors can still benefit from the £150 per head for an annual event (like a christmas party),
The cost of food and travel when working away from the normal place of work IS still allowable for directors.
As you can see the subject of travel and entertainment costs and claims is pretty complicated and not as generous as you might expect. This is an area that we would advise you to err on the side of caution unless you are using a qualified accountant to prepare your annual returns.
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