Tax Relief on Travel Expenses
Any payment or reimbursement of job expenses by an employer is exempt from PAYE tax and NI. However, job-related travel does have its own special set of rules. Any exemptions applies when the travel expense is either:
- Made in the course of doing your job (if your role involves visiting customers)
- For a temporary purpose required by your job (you need to check a building site etc)
Travel expenses cover all associated costs so this means that things such as hotel bills and subsistence are also included!
Even if the expenses are exempt or taxable, it does not affect the business’s right to deduct the cost when working out taxable profits or losses. But, if the expense is not exempt, the employer is liable to Class 1 or Class 1A NI (at 15% for 2025/26!).
But, some tax inspectors sometimes argue that some travel costs are more luxurious than they need to be. If so, HMRC has the right to treat the expense as a reward for the employee and so it is not covered by the exemption. This means that at least a part of it would be taxable and liable to NI. To make sure this doesn’t happen, just take a reasonable approach- HMRC can’t dictate what hotel you stay in!
If you are challenged about the expenses by HMRC get in contact with us on 01622 738165 and we can help you with the internal guidance.



