A Guide to Employee Travel Expenses
Employers have a duty of care to ensure that their employees are able to effectively carry out their jobs, which includes providing them with the necessary equipment and facilities. In some cases, this can include giving employees the opportunity to travel for work purposes. If your business does have employees who frequently need to travel on business, it’s important that you understand what expenses they can claim from your company and what standards apply when it comes to reimbursing those expenses.
Thankfully, we’ve written this in-depth guide to employee travel expenses to help answer any common questions you may have surrounding this subject.
Table of Contents
- What Travel Expenses Can an Employee Claim?
- Can Home-Based Employees Claim Travel Expenses?
- Do Employers Have to Pay for Travel Expenses?
- Are Travel Expenses Taxable?
- Benefits of a Business Travel and Expense Policy
- Manage Employee Travel Expenses the Easy Way
What Travel Expenses Can an Employee Claim?
Travel expenses are the costs associated with traveling to and from work. These can include: airfares and baggage costs for domestic or overseas travel, accommodation, transport fees (i.e. train, bus, taxi, or ride-sharing), car hire costs and associated fees (i.e. tolls, fuel, parking), or food and beverages when staying overnight.
Employees can claim these expenses if they're directly related to their employment and not reimbursed by another party such as their employer or client.
The cost of travel between home and the usual place of work (e.g., public transport to an office) is not deductible. It is only when employees have no other place available in which to work that these expenses become applicable. This is the case if an employer requires a worker to travel away from home overnight, such as when they are sent on a business trip. In this situation, employees can claim the cost of accommodation and meals while away from home.
Can Home-Based Employees Claim Travel Expenses?
Working from home arrangements, which have greatly increased since the onset of Covid-19, also present a grey area in terms of employee travel expenses.
Just like office-based workers, those who work from home can deduct the costs associated with travelling to temporary workplaces like client locations for meetings.
If an employee's primary place of employment is their home but they also frequently visit another place of business, however, then both places may count as a permanent workplace. For instance, an employee might work from home four days per week but come into the office once per week for meetings or to pick up additional work. In this case, travel between both locations would be deemed routine commuting and thus not be reimbursed as a travel expense.
Do Employers Have to Pay for Travel Expenses?
Although it is common practise for employers to reimburse employees for their travel costs, it is not required by law that they do so. What has been agreed upon between both parties within the job contract will determine whether or not they do so.
Are Travel Expenses Taxable?
In order for travel expenses to be taxable, they must first meet a number of basic rules.
Travel expenses are only deductible if:
Employees are required to travel in order to fulfil their job responsibilities.
They are journeys an employee takes to or from locations they must visit in order to accomplish their obligations, such as going from the office or another work location to a client's home or another "temporary" workplace. This guideline can also apply to trips made straight from an employee’s house to a client's location or another "temporary" workplace.
The term "temporary" has a specific meaning in tax law that differs from the common, everyday sense of the term. It normally refers to any work that is required of an employee as part of their "core" employment and is performed temporarily in another location.
When calculating the tax benefits for employees who drive their own vehicles for business purposes, there are also specific guidelines that must be followed. We’ve covered each of these in this guide to HMRC’s business mileage claims and in this guide to Irish Civil Service Mileage Rates.
Benefits of a Business Travel and Expense Policy
Any sort of expense management is essential for organisations because it enables them to control wasteful spending and stay on top of their budget. Travel can cause significant costs for a company, and if employers aren't careful, it might seriously affect their bottom line.
In addition to setting guidelines for how employees plan business travels, managing business travel expenses ensures adherence to travel and spending policies. Correct cost management procedures also enable organisations to examine expense patterns, maintain an organised record of travel-related receipts, and guard against employee expense fraud.
When all employees are expected to follow the same expense policies, regardless of their status or rank within your organisation, it's also easier for them to understand what is expected of them and how they can help you achieve your goals. This will also help prevent any resentment among those who feel they're being treated unfairly because they're not as important as others in the company.
Another crucial component of a business travel and expense policy is that it guarantees employees never have to pay out of pocket for expenses incurred when travelling for work. Employee dissatisfaction and mistrust may develop as a result of delayed expense reimbursement. Thankfully, this problem is overcome by an efficient expense management procedure.
Manage Employee Travel Expenses the Easy Way
Travel is one of the most common expenses for employees, but it can be confusing. This is why it’s incredibly important to not only understand the rules surrounding employee travel expenses, but also to have an efficient travel expense policy in place.
One way to make overseeing employee travel expenses easier on both employers and employees is to utilise expense management software, such as ExpenseIn. With a receipt scanning feature, employees can create and submit travel expenses in seconds, while skipping the monotonous data extraction. Additionally, automated policy checks cut down on expense rejections and minimises potential employee expense fraud. The software also increases travel expense policy awareness by enforcing employees to accept policies before they submit their travel expenses.