Incidental overnight expenses

Incidental overnight expenses

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If a self-employed person (i.e. not employed by a limited company or other corporate structure) travels away on their business, can they claim as a tax deductible expense the Incidental Overnight Expense allowance of £5 per night (UK travel), £10 per night (overseas travel)?

Many thanks....

Replies (7)

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By Steve Kesby
08th Jul 2013 12:21

No

Employees can't claim them as an expense either.

It's simply the case that if the employer chooses to pay such an amount they are tax free (if paid within the limit).

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Old fat furry cat-puss
By bagpuss1968
08th Jul 2013 12:27

If an individual cannot claim them, does this mean that an employer has to have a "company-wide" policy, applicable to all, that these amounts will be paid to everyone or none at all?

How would the employer get to know about the overnight stay without some form of notification (i.e. a claim?) from the individual concerned?

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By Steve Kesby
08th Jul 2013 12:41

Yes

That's exactly how it works normally. The employer has a policy under which employees can make a claim for incidental overnight expenses in specified circumstances. If the amounts paid and conditions are within the exemption, the payment by the employer will be tax-free.

See EIM02710.

One man band type companies can "pay" themselves (it's often credited to a loan account for them) these amounts, but the same can't be achieved by someone that's self-employed (there not being an employer in that situation).

Thanks (1)
Old fat furry cat-puss
By bagpuss1968
08th Jul 2013 13:14

Proof of expenditure needed?

Steve

Many thanks for clarifying.

In a former role, I was allowed to "claim" or "notify" my employer and receive £5 per night (UK) when I was away on business without providing any receipts for the expenditure that this was intended to cover.  My employer said that this was accepted by HMRC - is this your understanding too?

Thanks again

Stephen

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By Steve Kesby
08th Jul 2013 14:01

Yes

If I employ you and send you away on business and you have to stay away three nights in the UK, I can pay you £15 tax-free, with no need for receipts.

If I didn't pay it to you though, you wouldn't be able to claim it as an employment expense.

And for the self-employed it would fail the wholly and exclusively test, even if you had spent that much.

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By Geoff187
19th May 2017 11:27

Hello I am really hoping you can help me , reference this discussion of incidental expenses , I have been claiming an Incidental expense for travelling abroad for work and my company has been paying me £10 for every night away.
We recently had a VAT/TAX inspection . Now the company are saying I am not entitled to this £10 for incidentals unless I provide receipts they gave me the following statement , which I am not sure of the meaning and if it is relevant to my situation.

In 2016, HMRC published an internal manual which described in more detail when an expense can be reimbursed to an employee as an incidental expense.

From this document, it is clear that an employee should only be reimbursed when an incidental expense occurred.

If the incidental expense didn’t occur, HMRC could argue that the payment represented an increase in the employee remuneration (and so no longer tax free).

Please see text below for more details.

A payment can only be Tax free if its is made wholly and exclusively for the purpose of defraying expenses that are incidental to the employees being away from home. If the payment is made for some other purpose, for example as remuneration ,it will not be under this registration .

I travel approx. 125-150 days abroad every year ,would be great if anyone can offer any advise

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Replying to Geoff187:
Stepurhan
By stepurhan
19th May 2017 12:10

Given this thread pre-dates the statement you quote by three years, you should really start your own thread to avoid confusion.

That said, with that much travel and HMRC already on your case, you should probably also be paying an accountant for help on this. You could end up digging yourself into a bigger hole by relying on free advice on an open forum.

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