Working away from home overnight -what can you claim for as a contractor as a genuine business expense? Secondly, when can you claim for this? While you are contracting, you may from time to time during your ordinary commuting, need to spend a night away from home for work reasons. In addition, you may also obtain a contract that is too far to travel to and from each day. Therefore, you may decide to stay away from home while you are working at your contract location during the week.
Whether you stay away occasionally overnight, or for most of the week, can you claim tax relief on your expenses incurred?
The choice of accommodation
Your choice of accommodation when working away from home overnight could be:
- you may even rent a property.
Therefore, when staying away from home overnight, what are you able to claim as business expenses?
Why you might stay away overnight for work reasons
Making the choice to stay overnight would usually be if your contract site is too far away to travel back home from each day. However, you could also claim for costs staying away overnight in other instances. This would include if you attend a training course or business-related seminar.
What can I claim for?
The good news is you can claim for the travelling expenses that get you to and from the contract location. This includes when you have stays outside the UK due to working abroad. The types of travel expenses that your company can claim tax relief on for genuine business trips will include:
- Other forms of public transport.
- Food costs or scale rates -if you agree a scale rate with HM Revenue & Customs (HMRC) first -the tax office will not often agree these with contractors due to them being a one-man operation).
There is also a difference between how business meals and meals that are of an entertaining type nature are treated for tax purposes. In addition, all of the travelling type costs that you can claim are also subject to not falling foul of the two-year rule.
Depending upon the type of work that you do, you may be able to claim for your business clothing. However, there are certain rules on what you can claim.
We also have a separate guide that covers relocation costs. This covers an instance where you are actually moving your primary place of residence.
Furthermore, if you are thinking about contracting abroad there are certain things to consider here too.
Staying in a hotel or B&B
If you are staying in a hotel or B&B, you can claim your accommodation costs.
What’s more, you can also claim for your meals. This will include breakfast, dinner, and evening meal while working away.
When you rent a property
If you are renting a property, you can claim for the rent. Importantly, you should aim to get the tenancy agreement in your company’s name.
You can also claim for the council tax and utility bills. In addition, and you should also try and get the utility bills in your company’s name too.
Whilst renting a property, you can claim for 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. If you do, you will need to split these out.
HMRC standard meal allowances
The tax office have some standard meal allowances available for people who work away from home. HMRC will update the exact maximum amounts that can be claimed as meal / subsistence allowances every year. The last update was on 7 April 2019 and the official HMRC meal allowances since this date are:
- £5 per day for travel of 5 hours or more
- £10 per day for travel of 10 hours or more
- £25 per day for travel of 15 hours or more, or if the travel is ongoing after 8pm.
As part of your accounting records, you should obtain receipts or invoices for accommodation costs. Furthermore, you should also obtain receipts for any other expenses that you claim while you work away.
Personal Incidental Expenses (PIEs)
Whether you are staying in a hotel or B&B or renting somewhere, you can also claim for incidental overnight expenses. The claim is known as Personal Incidental Expenses (PIEs). You can claim this for each night for overnight stays for business purposes. The rates for PIEs are £5 per night in the UK and £10 per night outside the UK.
Notably, PIEs are an allowance to cover sundry expenses while away, such as coffees, phone calls home, and laundry. You do not need to get receipts for the expenses that are covered by PIEs.
When you claiming for your costs whilst working away, they are subject to the 24-month rule. This means that 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.
This article highlights what you can claim tax relief on when you are staying away from home overnight for work reasons. As in all cases when you claim for business expenses, they 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