For many businesses, regular employee travel is an essential part of their operations. Whether it is generating new customers, servicing existing ones or attending conferences and other events, travelling often generates a number of ad hoc expenditures. If a company pays for these expenditures on behalf of their employees, they will have tax, national insurance and reporting obligations.
What counts as travel and subsistence?
Not all costs incurred while travelling will count as travel and subsistence expenses for tax purposes. It is important to know what constitutes a taxable expense and what doesn’t before your employees leave.
Travel refers to:
- providing travel to your employees
- reimbursing employees for the money they spend on travel
Subsistence refers to:
- other costs related to travelling such as business calls, parking charges and tolls.
With regards to public transport, costs include:
- season tickets for employees
- reimbursement for season tickets bought by employees.
There are a number of situations which do not need to be reported. The first important exemption is that if the employee in question is paid at a rate of less than £8,500 a year, the costs of their travel do not need to be declared.
There is no legal requirement to count costs that are part of your employees’ regular duties (such as service engineers or delivery personnel), or those that cover their journey to a temporary workplace.
When it comes to private travel, any costs associated with the travel of employees paid less than £8,500 a year do not need to be reported.
The following private travel costs for employees and directors are also exempt:
- a works bus service
- occasional, non-regular taxi journeys
- temporary taxi replacements of unavailable car-sharing systems
- bicycle or cycle safety costs
- travelling to work when public transport is disrupted by industrial action
- in certain circumstances travel for employees with a disability.
For public transport costs, you do not have to report to HMRC if you are contributing to a subsidised or free public bus transport for employees to travel to and from work.