The rules for allowable business expenses are generally similar for limited and unlimited companies, with some subtle exceptions. Where there are differences – these are identified in the guide below.
Hotels and accommodation
Accommodation whilst travelling on business
- If you are travelling around the country/globe visiting clients then the cost of your hotels are an expense to your business.
- However, if for convenience you stay there for the weekend, you should only claim the expense for when you are there working.
- HMRC will expect expenses to be reasonable and may question a stay at the Ritz. Excessive costs may be taxed as a benefit in kind.
- If you are travelling for business and pleasure, the pleasure amount must be incidental to the trip for it to be an allowable expense.
- If you are working abroad for a long period of time there are circumstances when you can claim the costs of your partner coming out to visit you.
- Depending on the circumstances you can claim a flat rate (without a receipt) of between £5 and £20 per night, depending on where in the world you have travelled to for work, as incidental expenses to cover food etc. However, with the rising costs of food you might be better off claiming the actual costs rather than the flat rate allowance.
- You can also, if it is cheaper, rent a property rather than pay for a hotel room.
- Again you should claim for business use only – if you are staying there 7 nights, but only working 5 days, then the 2 days should not be claimed as a business expense.
- Beware the 2 year rule – if you are renting for more than two years then the area you are staying in is then deemed your home and the cost becomes a non-allowable expense.
Accommodation provided by the business – general
- The provision of living accommodation by reason of employment, other than job-related accommodation, is an allowable expense whether provided to the employee personally, or to a family or household member.
For the employee
- Living accommodation that is not job related, or part of a relocation package is a benefit in kind
Accommodation provided by the business – job related
The provision of living accommodation in connection with the employment will not be taxable provided it falls within one of the following exceptions:a. where its occupation is necessary for the proper performance of the employee’s duties (for example, a caretaker);b. where the accommodation is provided for the better performance of the duties of the employment, and the employment is one where it is customary for employers to provide living accommodation for employees (for example, farm workers); orc. where, because of a special threat to the employee’s security , special security arrangements are in force and the employee resides in the accommodation as part of those arrangements (for example, the chairman of a company providing politically sensitive and therefore high-risk services).
The exemptions outlined in a . and b . above will only be available to a director who is a full-time working director and either:– has no material interest in the company ; or– is a director of a non-profit-making or charitable company.
We hope you find this series on expenses helpful. Please take a moment to check out our other articles.