Working away from home overnight

Share This Guide, Choose Your Platform!

Introduction   

Working away from home overnight -what can you claim as a limited company contractor as a genuine business expense? In addition, when are such expenses tax-deductible and when can you claim 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 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:

  • A hotel.
  • B&B.
  • You may even rent a property.

Therefore, 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. Please note that this will include when you stay 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:

  • Mileage.
  • Rail fares.
  • Flights.
  • Other forms of public transport.
  • Food costs or scale rates -if you agree on a scale rate with HM Revenue & Customs (HMRC) first -the tax office will not often agree on these with contractors due to them being a one-person operation).

Please note 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 work 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, which 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.

Staying in a hotel or B&B   

You can claim accommodation costs if you are staying 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.

When you 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, and if you do, you will need to split these out.

Other instances when you may stay away overnight for work reasons

As a limited company contractor, 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 standard meal allowances

The tax office has fixed rates for working away from home allowance. These are standard meal allowances for people who work away from home. HMRC will update the maximum amounts that can be claimed as meal/subsistence allowances yearly. 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 8 pm.

Obtaining 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. 

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 costs that PIEs cover.

24-month rule

When you claim for your costs while working away, they are subject to the 24-month rule. Please note 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.

Final thoughts     

This article highlights what you can claim tax relief on when you stay away from home overnight for work reasons. As in all cases, when you claim 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 

LinkedIn    https://www.linkedin.com/groups/4660081/

Published On: August 1st, 2022 / Categories: Expenses, Member Only Articles, Running Your Own Company /

Share This Guide, Choose Your Platform!

Leave A Comment