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Introduction
Let’s consider working away from home overnight when you’re UK contracting. Basically, can a contractor claim travel expenses when they work away (UK)? If they can, what can you claim as a contractor as business expenses? In addition, if you’re a UK limited company contractor and are staying away for work reasons, when are such working away expenses and overnight subsistence costs tax-deductible? Under HM Revenue & Customs (HMRC) rules, a cost is tax-deductible when it’s incurred wholly and exclusively for business purposes.
When you work away, besides your actual travel and subsistence (UK) costs, you can also claim for a HMRC overnight allowance working away (UK)? However, in addition to the staying away allowance or overnight expenses allowance, is there anything else you can claim for, besides your expenses which you incur while working away? As we have established, while away you can make a claim for the HMRC working away from home allowance. However, what else can you claim as a UK contractor? Basically, you will probably ask this if you start working away from home and are claiming travel expenses as a contractor.
In this guide, we’ll look into what you can claim for working away from home expenses. In addition, we’ll look into what to consider when you’re claiming accommodation for work. We’ll also take a look at working away from home tax deductions. As part of this, we’ll investigate what you can claim for overnight expenses and an overnight allowance (UK) when you work away and stay near your work location overnight. Finally, we’ll also take a look at the official HMRC subsistence rates (UK) and the daily allowance rules.
Initial thoughts
First thoughts
While you are contracting, you may work at various locations. In addition, during your ordinary commuting, you may need to spend a night away from home for business reasons. What’s more, as a contractor you may also obtain a contract that is too far to travel to and from each day. In the UK, many workers and contractors who have work away jobs or contracts, may need to stay away overnight near their workplace. Therefore, staying away from home for work may be the best option while working at your contract location during the week.
Check what you can claim
While contracting, you may be staying away for work occasionally in the UK overnight, or for most of the week. Therefore, you will need to check if you can claim tax relief on your expenses incurred and if you can claim a HMRC overnight subsistence allowance. While working away from home, limited company contractors should find out what they can claim through their business. Business expenses would include accommodation and any subsistence expenses such as meal costs. In addition, there may be other working away from home entitlements.
Common questions
Both contractors and workers alike will have certain questions when they stay away overnight for work reasons on some occasions. Therefore, these include:
- What is the subsistence allowance HMRC?
- Can I claim tax relief for working away from home?
- Can you claim food expenses when working away?
- Is there a food allowance when working away from home?
- How much is working away from home allowance?
- What is the subsistence allowance UK?
- What is the ltd company subsistence allowance?
- How much is the overnight meal allowance 2023?
- What is the staying away from home allowance?
- What is an overnight allowance?
- Should I get paid extra for working away from home?
In this guide, we will take a look at what a contractor who works away can claim as genuine business expenses. This will include your actual business expenses as well as any working away from home allowances.
What to consider with regard to working away from home overnight
Types of accommodation for contractors
If you are staying away for work overnight for business reasons you will need some working away from home accommodation and this could be one of the following:
- A hotel.
- B&B.
- You may even rent a property especially if you are working away from home during the week.
Therefore, besides contractors’ accommodation costs, what can you claim as business expenses and pay tax-free when you are working away from home overnight?
What can I claim as tax-deductible expenses?
The good news is you can claim for the travelling expenses that get you to and from the contract location. In addition, you can claim for your contractor subsistence expenses and working away entitlements. Basically, this includes when a contractor stays outside the UK due to working abroad. Therefore, if you are an IT contractor being paid for travel (or any other sort of contractor), the types of travel expenses that your company can claim tax relief on for genuine business trips will include:
- Mileage.
- Rail fares.
- Flights.
- Other forms of public transport.
- Meal expenses when working away from home.
- HMRC expenses rates while working away.
- Food costs or scale rates, if you agree on a scale rate with HMRC first. The tax office will not often agree on these with limited company contractors. This is due to them being a one-person operation.
There is also a difference between how we treat business meals and meals of an entertaining nature for tax purposes. In addition, all the traveling costs you can claim are also subject to not falling foul of the two-year rule.
Depending upon the type of business that you do, you may be able to claim for your business clothing. However, there are specific rules on what you can claim.
We also have a separate guide covering relocation costs. This covers an instance where you are actually moving from your primary residence.
Furthermore, if you are considering contracting abroad, there are certain things to consider here too.
The choice of accommodation when you are working away from home overnight
Staying in a hotel or B&B
You can claim accommodation costs if you are staying away from home for business reasons in a hotel or B&B. What’s more, you can also claim for your meals, including breakfast, dinner, and evening meals, while working away from home.
Rent a property
If you are renting a property, you can claim the rent. Importantly, it would be best if you aimed to get the tenancy agreement in your company’s name.
You can also claim for the council tax and utility bills. In addition, you should also try and get the utility bills in your company’s name too.
While renting a property, you can claim your meals if you are eating out. Alternatively, if you are having your meals at your rental accommodation, you can claim for your shopping bills. Please be careful not to include any personal items on your shopping bills. However, if you do, you will need to split these out.
More areas to consider
Other instances when you may stay away overnight for business reasons
As a contractor limited company owner, making the decision to stay overnight would usually be if your contract site is too far away to travel back home from each day. However, while you may be able to claim for working away from home overnight you can also claim for the cost of staying away in other instances. This may include if you attend a training course or business-related seminar.
HMRC subsistence allowance -working away from home (UK)
The tax office also has fixed rates for a HMRC working away from home allowance (UK). These are also known as the HMRC subsistence rates 2023. Basically, they are standard meal allowances for people who work away from home. HMRC will update the maximum amounts that can be claimed as a working away meal allowance (UK) or subsistence allowances yearly. As of 2023, the official HMRC working away from home allowance rates per day for meals inside the UK are:
| Minimum journey time | Maximum amount of meal allowance |
|---|---|
| 5 hours | £5 |
| 10 hours | £10 |
| 15 hours (and ongoing at 8pm) | £25 |
Further areas to consider
Working away from home overnight -obtain receipts
You should obtain receipts or invoices for accommodation costs as part of your accounting records. Furthermore, you should also get receipts for any other expenses you claim while you work away (UK).
Overnight allowance working away (UK) -Personal Incidental Expenses (PIEs)
Whether you stay in a hotel or B&B or renting somewhere, you can also claim a work away from home allowance to cover any incidental overnight expenses. This working away allowance (UK) or overnight subsistence allowance is known as Personal Incidental Expenses (PIEs). You can claim for PIEs overnight allowance (HMRC) for each night that you stay away overnight for business purposes. The HMRC overnight allowance working away from home rates for PIEs are £5 per night in the UK and £10 per night outside the UK.
The PIEs working away from home allowance (UK) is there to cover sundry expenses. This includes coffees, phone calls home, and laundry. However, you do not need to get receipts for the overnight allowance working away costs that the PIEs cover.
24-month rule for contractors and those who work away
When you claim for your costs while working away from home, they are subject to the 24-month rule for UK contractors. Therefore, once you know you will be based at your current work location for longer than 24 months (and spend more than 40% of your working time there), you will no longer be able to claim for your travel expenses and PIEs, etc.
Final thoughts
This article highlights what you can claim tax relief on while you are UK contracting and staying away for work reasons. We also cover what is available as a HMRC working away from home allowance. As in all cases, when you claim business expenses, the amounts which you clam in respect of working away from home should be `reasonable’ and not excessive. In addition, you should also make sure that you do not fall foul of the 24-month rule. Failing either of these tests will result in the expenses becoming subject to Income Tax and National Insurance contributions.
Link to Contractor Advice UK group on
