Claiming Back Travel Expenses from HMRC: A Step-by-Step Guide for Businesses

By Ashley FerroNovember 28, 2023

Are you feeling overwhelmed by the complex rules around HMRC travel expenses? Unsure about what qualifies or how to claim your travel costs back?  

Our guide is here to clear the fog, providing you with a straightforward path to reclaim your business travel expenses 

This article will help you navigate the HMRC guidelines with ease, ensuring you get the reimbursements you're entitled to without the stress. 

We'll be covering:

What Qualifies as HMRC Travel Expenses? 

When it comes to business travel, understanding what exactly qualifies as a travel expense under HMRC guidelines is crucial for businesses in the UK.  

What Qualifies as HMRC Travel ExpensesBroadly, HMRC defines travel expenses as costs incurred while employees are travelling for work purposes. These include: 

  • Transport costs: Airfare, train, bus tickets, and even car or van rentals. 

  • Mileage: If using a personal vehicle, the specific approved amount for HMRC travel expenses per mile can vary. 

  • Accommodation: Hotel stays for overnight business trips. 

  • Meals and refreshments: Including reasonable costs for food and drink. 

  • Additional charges: Parking fees, tolls, congestion charges, and business-related phone calls. 

It's important to note that HMRC focuses on expenses that are "wholly and exclusively" for business purposes. This means personal travel costs mixed with business travel need to be separated.  

Also, ordinary commuting, or travel to and from a regular workplace, doesn't qualify as a business travel expense. This distinction is crucial for financial compliance and accurately claiming expenses.  

Understanding these nuances helps in effectively distinguishing between personal and business travel, ensuring that claims align with HMRC's criteria. 

Reporting and Tax Implications for HMRC Travel Expenses 

When handling HMRC travel expenses, employers are faced with specific reporting requirements and potential tax reliefs, balancing compliance with tax efficiency. 

Tax Relief and Reporting Requirements 

Tax Relief & Reporting RequirementsEmployers reimbursing employees for travel expenses need to understand that costs like transport, accommodation, and meals can often be exempt from tax, but only if these expenses are purely for business purposes.  

It's imperative for employers to: 

  • Keep meticulous records. 

  • Report expenses in detail to HMRC. 

  • Ensure proper documentation for compliance. 

Understanding Tax-Free Reimbursements 

The criteria for tax-free reimbursements are strict. Reimbursements aligning with actual expenses or HMRC's per diem rates generally remain tax-free.  


  • Reimbursements over these limits might be taxable. 

  • Employers should carefully track and categorise these expenses. 

When it comes to private travel, understanding tax implications is vital: 

  • Transport provided for private use is subject to National Insurance. 

  • Correctly distinguishing between business and private travel avoids compliance issues. 

By mastering these aspects, employers can effectively manage travel expenses, ensuring they meet HMRC standards and optimise their tax position. 

Claiming Travel Expenses as an Employee 

Travel expenses can be a significant outlay for employees, especially those who travel frequently for work.

Understanding how to effectively claim these expenses back is essential. It not only ensures you’re reimbursed promptly but also helps you stay compliant with tax regulations. 

Eligibility for Claiming Travel Expenses 

Firstly, to claim travel expenses, the travel must be strictly for business purposes. This includes trips to meet clients, travel to a temporary workplace, or attending conferences.

Commuting between your home and permanent place of work is typically not covered. 

Eligible travel expensesEligible travel expenses include, but are not limited to: 

  • Public transport fares 

  • Mileage costs if using your own vehicle 

  • Parking fees and tolls 

  • Accommodation if required to stay overnight 

  • Meals on overnight trips 

Understanding the Claims Process 

Process for claiming travel expensesThe process for claiming these expenses usually involves: 

  1. Collecting receipts: Keep all paper receipts and e-receipts from your travels, as these are crucial when submitting your expense report. 

  2. Completing an expense report: Fill out your employer's expense report form, detailing the costs incurred and attaching the relevant receipts. 

  3. Submitting for approval: Send your completed expense report to your manager or the finance department for approval. 

  4. Reimbursement: Once approved, the expenses will be reimbursed, typically through your payroll. 

Conditions for Claims 

To ensure a smooth claims process: 

  • Submit your claims in a timely manner, adhering to company policy on expense submissions. 

  • Ensure that your claims are accurate and free from errors to prevent delays. 

  • Be aware of company limits on certain types of expenses, such as meals or entertainment. 

  • Use company-preferred booking channels and vendors if required. 

Claiming travel expenses doesn’t have to be complicated. By understanding what’s covered, keeping meticulous records, and following your company's procedures, you can be reimbursed without hassle.  

Always check with your HR department for specific guidelines related to your company's travel expense policy. 

Travel Expenses for the Employers 

Employers should first understand which expenses are considered reimbursable.

These typically include transportation costs like airfare and mileage, lodging for overnight stays, and meals during business trips.  

It’s important to communicate to employees what qualifies as a business travel expense and the limits of these expenses. 

The Reimbursement Process 

The Reimbursement ProcessThe reimbursement process typically follows these steps: 

  1. Policy communication: Clearly communicate the travel expense policy to all employees, detailing what is covered and the limits on certain expenses. 

  2. Expense reporting: Employees submit their travel expense reports along with the necessary receipts or documentation. 

  3. Review and approval: The submitted reports are then reviewed for accuracy and compliance with company policy before approval. 

  4. Reimbursement: Approved expenses are reimbursed, usually through the company's payroll system. 

Keeping Records and Receipts 

Accurate record-keeping is essential. Employers should keep: 

  • All receipts and documentation related to employee travel expenses. 

  • A record of the purpose and business benefit of each expense. 

  • Copies of all submitted expense reports and reimbursement records. 

Tax Compliance 

It's important to stay compliant with tax laws concerning travel expenses. This includes: 

  • Only reimbursing expenses that are "wholly, exclusively, and necessarily" for the purposes of the business. 

  • Using the Approved Mileage Allowance Payment (AMAP) rates when reimbursing mileage, but remember that employees can claim tax relief on any shortfall where they are paid less than the approved amount. 

Per Diem Rates and Meal Allowances: A Guide to HMRC Regulations 

What Are Per Diem Rates? 

Per diem rates are daily allowances given to employees to cover expenses incurred while travelling for business. These rates are predetermined amounts covering accommodation, meals, and incidental expenses. 

 You can reimburse subsistence to employees by making a scale rate payment using HMRC's published rates. 

HMRC’s Benchmark Rates for Meals 

HMRC sets specific benchmark rates for meal allowances that employers can pay tax-free without the need for receipts. These rates apply to meals taken during business travel, and the amounts are determined by the length of the trip.  

For example, there is a set amount for travel lasting more than 5 hours, a higher amount for over 10 hours, and the highest rate for travel extending beyond 15 hours. 

If your employee is travelling to a place not shown in HMRC's table of overseas scale rates, you can use the rates for the closest city shown for the country or the geographically closest city if the country is not listed. 

Negotiating and Applying Per Diem Rates 

While employers can use HMRC's benchmark rates, they also have the flexibility to negotiate different rates.  

If employers choose to pay rates that exceed the HMRC benchmarks, employees may need to pay tax on the excess amount. It’s important for employers to: 

  • Agree on per diem rates with employees as part of their employment contracts or travel policies. 

  • Ensure that the rates are fair and reflect the actual costs employees might incur. 

  • Apply these rates consistently across the organisation. 

Conditions for Applying Per Diem Rates 

To apply per diem rates effectively, employers should: 

  • Only apply them to trips that are solely for business purposes. 

  • Not pay per diem rates for routine travel between home and work. 

  • Keep records of the travel dates, locations, and business purpose for each trip. 

Special Cases and Rules: The 24-Month Rule and Advisory Fuel Rates 

The 24-Month Rule Explained 

HMRC's 24-month rule is an important tax regulation for self-employed individuals and employees who travel for work.  

It states that travel expenses to a temporary workplace are only allowable for tax relief if the engagement is expected to last less than 24 months. If the engagement is expected to, or actually does, last more than 24 months, the location is considered a permanent workplace and travel costs are not eligible for tax relief. 

Applying the 24-Month Rule 

For the application of the 24-month rule, employers and employees should: 

  • Keep track of the duration of engagements and expectancies from the start. 

  • Monitor any changes in the contract that could affect the expected duration. 

  • Maintain clear records of travel expenses and contract details for tax purposes. 

What are Advisory Fuel Rates? 

Advisory Fuel Rates (AFRs) are guidelines set by HMRC for employees using a company car to calculate mileage costs for business journeys. These rates give the amount per mile that HMRC considers reasonable to reimburse employees for business travel in their company cars, without incurring taxable profit and no Class 1A National Insurance to pay. 

AFRs are reviewed and updated quarterly and vary depending on the engine size and fuel type of the vehicle. Employers can use these rates to: 

  • Reimburse employees for business travel in their company cars. 

  • Require employees to repay the cost of fuel used for private travel at the correct AFR or higher, ensuring no fuel benefit charge. 

Best Practices for Travel Expense Management 

Best Practices for Travel Expense ManagementEffective travel expense management is essential for ensuring financial accuracy and tax compliance.  

Here are key best practices to consider: 

  • Develop a comprehensive travel policy: Clearly articulate what qualifies as a reimbursable travel expense to avoid ambiguity and ensure consistency. 

  • Leverage technology: Implement a robust expense management system that can handle reporting, tracking, and storing digital receipts. 

  • Educate your team: Regularly train employees on expense submission procedures and the importance of compliance with both internal policies and HMRC regulations. 

  • Keep detailed records: Maintain organised records of all travel expenses, including receipts, mileage logs, and expense reports, for a minimum of six years as required by HMRC. 

  • Stay informed: Keep abreast of changes in HMRC guidelines, including rates and regulations, and update your policies accordingly. 

  • Review and verify: Conduct regular audits of travel expenses to ensure accuracy, prevent fraud, and assess the effectiveness of your travel policy. 

  • Promote timely reporting: Encourage employees to submit their expenses promptly to maintain a steady flow of information and facilitate quicker reimbursements. 

  • Ensure secure storage: Use secure and reliable methods for storing records to protect sensitive information and ensure easy retrieval when needed. 

Streamlining HMRC Travel Expense Claims with ExpenseIn 

ExpenseIn interface on mobile and laptopExpenseIn's features are specifically tailored to meet the needs of UK businesses managing HMRC travel expenses: 

  • Mobile claims: Submit travel expenses directly via the ExpenseIn mobile app, in compliance with HMRC guidelines. 

  • Receipt scanning: Capture receipts with real-time scanning, ensuring accurate date and amount capture for HMRC records. 

  • HMRC-approved mileage rates: ExpenseIn automatically applies HMRC-approved rates for mileage reimbursement. 

  • Audit-ready reports: Generate detailed reports that are ready for HMRC audits with full expenditure visibility. 

  • Seamless integration: Sync with accounting software to maintain consistent records, essential for HMRC compliance. 

  • Policy enforcement: Set up expense policies within ExpenseIn to automatically enforce HMRC rules, reducing errors and non-compliance. 

These features combine to provide a robust system for managing travel expenses.  

By aligning with HMRC's standards and providing a platform for accurate and compliant expense reporting, ExpenseIn is an indispensable tool for any business aiming to streamline their expense claims process and ensure compliance. 

Discover the ease of managing HMRC travel expenses with ExpenseIn firsthand. Book a demo now and start making expense management effortless.