Travel & Subsistence Claims: What UK Directors & Staff Can Claim

Why Travel and Subsistence Rules Matter for Limited Companies

For limited company directors and employees, travel and subsistence costs reimbursed by the company can be entirely tax-free — both for the individual and for the company. Get it right, and you reduce your corporation tax bill while keeping your people out of pocket. Get it wrong, and HMRC can treat those payments as taxable benefits, triggering income tax, National Insurance, and potential penalties.

The Golden Rule: Wholly, Exclusively, and Necessarily

HMRC's core test for employee travel expenses is that the journey must be wholly, exclusively, and necessarily incurred in the performance of the employment duties. This is a stricter test than the one applied to self-employed individuals, so it pays to understand the boundaries clearly.

What Counts as a Qualifying Business Journey

Not all travel is claimable. HMRC distinguishes between ordinary commuting and genuine business travel:

• Permanent workplace travel is not claimable. The daily journey from home to your regular office is ordinary commuting and does not qualify, even for directors.
• Temporary workplace travel does qualify. If an employee travels to a client site, a project location, or any workplace they attend for less than 24 months (and where attendance is not expected to be permanent), the travel is claimable.
• Travel between workplaces qualifies. Journeys between two business locations in the same day — for example, from your office to a client meeting — are fully reimbursable tax-free.
• Travel from home to a temporary workplace qualifies. If there is no permanent workplace, or the employee is travelling to a site that meets the temporary workplace definition, home-to-site travel is allowable.

Subsistence: Meals, Accommodation, and Incidentals

Subsistence costs incurred during qualifying business travel can also be reimbursed tax-free. This covers meals, accommodation, and incidental overnight expenses. Key points include:

• Meals are claimable when the employee is away from their normal place of work on a qualifying business journey. There is no set daily limit in law, but costs must be reasonable. Many companies use HMRC's benchmark scale rates to simplify administration.
• Accommodation costs for overnight business stays are fully reimbursable, provided the trip is genuinely for business purposes and not excessive or personal in nature.
• Incidental overnight expenses — things like personal phone calls or newspapers during an overnight stay — are covered by HMRC's statutory overnight allowance of £5 per night in the UK and £10 per night overseas.

Using HMRC's Scale Rates to Simplify Claims

Rather than requiring receipts for every coffee or sandwich, companies can use HMRC's benchmark meal scale rates. As of 2026, these are: £5 for breakfast (when leaving before 6am or after an overnight stay), £5 for a meal on a journey of five hours or more, and £10 for a meal on a journey of ten hours or more. A supplementary rate of £25 applies to journeys of 15 hours or more that extend beyond 8pm. Using these rates removes the need for individual meal receipts, though you must still evidence the business journey itself.

Records You Must Keep

HMRC expects companies to retain evidence of every claim. At a minimum, keep:

• The date, origin, and destination of each journey
• The business purpose of the travel
• Receipts for transport, accommodation, and any subsistence not claimed under scale rates
• Mileage logs if claiming for use of a personal vehicle

The 24-Month Rule: A Common Director Pitfall

One area that catches many director-shareholders out is the 24-month temporary workplace rule. If you attend the same client site or location for more than 24 months and it represents more than 40% of your working time, HMRC will reclassify it as a permanent workplace. From that point, travel there is ordinary commuting and no longer tax-free. Review your working patterns regularly to ensure continued compliance.

Practical Next Steps

Set up a clear expenses policy within your company that references HMRC's rules, use scale rates where possible to reduce administration, and ensure your payroll or accountant processes reimbursements correctly. Where expenses are reported via a P11D or covered by a PAYE Settlement Agreement, ensure those processes are up to date before each tax year end.