Top Tips To Claiming Business Travel Expenses

The rules of claiming business travel expenses do differ country to country, however you are often able to enjoy tax deductions on regular business travel inside and outside of the United States. While many businesses will work closely with a company that offers corporate travel management services to help them to manage this closely without too much in-business involvement, understanding how to properly claim business travel expenses can be a helpful trait.

What Qualifies As A Business Travel Expense?

A business travel expense can be any form of expense through the duration of your business trip. Leaving your tax home (i.e. the area in which your business is based) for longer than a usual work day, spending the majority of your time doing business (i.e. not lounging on the beach for 5 days out of 7 for the trip), and when the expense is classified as ordinary and necessary in order to carry out business activities. In the United States, the IRS also requires the trip to be planned for in advance.

Outside of the US however, business travel rules are less strict with 25% of your time being spent carrying out business activities rather than the majority of your time.

There are a number of things which can qualify as a business travel expense, including:

• Cost of air fare, train or bus tickets from your home / business to the destination where you will be conducting business.
• Costs of baggage
• Costs of accommodation and any rentals i.e. a rental car

In the US, you are also able to deduct 50% of eligible business meals and 50% of meals consumed when travelling to and from your destination.

If you are using your own vehicle, you are also eligible for deducting this as a business expense. There are two ways to do this:

Actual Expenses – where you cost up the associated costs with using your vehicle i.e. gas, parking tickets, insurance etc. and multiply it by how often you use this for business. That calculation is what you would then deduct.

Standard Mileage – You can claim the standard mileage rate vs. the number of business miles you have driven within the tax year.

Do Business Travel Expenses Differ In The UK?

The rules in the UK are similar to the US in terms of what you can claim for – for example public transport costs, accommodation, food and drink (although this can be 199% rather than 50% as outlined by the IRS), parking fees, printing costs and more.

You are able to claim business travel expenses as a tax deduction if you have paid tax on the earnings in the year that you are claiming for. This tax relief is then provided based on. The expenses and how much has been spent vs. the rate of tax that you pay.

As a clear example:

If you spent £100 and you pay 20% tax in that year, the tax relief may be £20.

What About If You’re Self Employed?

You are able to apply for some business travel expenses if you are self employed. In the UK they are classified as ‘allowable business expenses’ such as vehicle insurance, fuel, hotel rooms, overnight business trips, parking etc.

In the US, this is even more flexible which opportunities to claim self-employment tax deduction on business travel and business meals as expected, but also on things such as advertising, home office expenses, retirement savings and start-up costs!

For those who are self-employed, you are able to claim travel expenses in Schedule C which is part of Form 1040.

How To Claim Travel Expenses

Making sure that you have financial statements, receipts and other records of expenditure can help to streamline the process of claiming your travel expenses. These may be requested as part of a tax audit in the future, so it is important to ensure that you have a record of this.

Hiring an accountant or bookkeeping team can help to improve the process of claiming your travel expenses, or if you are an employee, speaking with your financial team in order to claim back any personal expenditure that you have made as part of a business trip can help to clear up the process.