5 min read

Expenses for International and Overseas Travel

Introduction

If your employees travel abroad for work, special tax rules can provide relief for travel and subsistence expenses that wouldn't qualify under normal UK business travel rules. These rules apply whether you're sending UK-resident employees overseas or bringing overseas employees to work in the UK, and they can cover everything from flight costs to accommodation and family visits on longer assignments.

Who the Special Rules Apply To

The special tax rules for foreign travel cover three distinct situations:

UK-resident employees who carry out all of their job duties abroad
UK-resident employees who carry out part of their job duties abroad
Non-UK resident employees (or qualifying new residents) who come to work in the UK

Whether an employee is UK-resident is determined using the Statutory Residence Test (SRT), which considers how many days they're physically present in the UK and where their spouse, civil partner or child under 18 is based.

A "qualifying new resident" is someone who is UK tax-resident but is still within their first 4 years as a UK resident following at least a 10-year period as a non-UK resident. This status can last for up to 4 tax years. Members of the House of Lords or House of Commons cannot be qualifying new residents.

Employees Carrying Out All Duties Abroad

When a UK-resident employee carries out all their job duties abroad, they can claim tax relief on:

Travel to and from the assignment:

The full cost of travelling from anywhere in the UK to their workplace abroad when starting the job
The full cost of travelling back to anywhere in the UK when finishing the job
If they have two or more jobs, the full cost of travelling between workplaces

Accommodation and subsistence:

The cost of accommodation and subsistence while working abroad, but only to the extent these costs are included in the employee's taxable earnings (for example, if you as the employer pay or reimburse them)

These reliefs only apply if the employee is living in the UK and their employer is UK-resident.

Additional journeys home:

If the duties can only be carried out abroad, the employee can claim tax relief for the full cost of journeys between anywhere in the UK and their workplace abroad during the assignment.

Family visits:

If the duties keep the employee abroad for 60 days or more continuously, they can claim tax relief for their spouse or civil partner and children (under 18 at the start of travel) to visit them. Relief covers:

Up to 2 outward journeys per tax year per family member
Up to 2 return journeys to the UK per tax year per family member

Again, these costs must be included in the employee's taxable earnings to qualify for relief.

Employees Carrying Out Part of Their Duties Abroad

When a UK-resident employee carries out only part of their duties abroad, tax relief is more limited. They can claim for:

Travel:

The full cost of journeys from anywhere in the UK to the workplace abroad and back, but only if the duties can only be carried out abroad

Family visits:

The same rules apply as for employees carrying out all duties abroad: if the employee is away for 60 days or more continuously, their spouse, civil partner and children can make up to 2 outward and 2 return journeys per tax year

The costs must be included in the employee's taxable earnings (paid or reimbursed by you) to qualify for relief.

Non-UK Residents and Qualifying New Residents Working in the UK

Similar special rules apply in reverse for non-UK resident employees or qualifying new residents who come to work in the UK, though the specific details of these reliefs are set out in the relevant HMRC guidance.

Overseas Subsistence Rates

Rather than reimbursing actual receipted expenses, you can use HMRC's published scale rate payments for overseas subsistence. These rates are set for specific cities around the world and cover:

Meals (broken down into breakfast, lunch and dinner)
Accommodation (room rates)
Other costs including drinks and travel between hotel and office
Rates for trips over 5 hours, over 10 hours, and 24-hour periods

For example, the rates for Buenos Aires, Argentina (in Argentinian pesos) are:

Over 5 hours: 147
Over 10 hours: 346.50
24 hour rate: 391 plus room rate
Room rate: 215.50 US dollars

Rates for Adelaide, Australia (in Australian dollars) include:

Over 5 hours: 57
Over 10 hours: 133
24 hour rate: 176 plus room rate
Room rate: 262.50

If your employee travels to a city not listed in the published rates, you can use the rates for the closest city shown for that country. If the country isn't shown, use rates for the closest city geographically.

Alternatives to Scale Rates

If you choose not to use HMRC's published overseas rates, you have two options:

1. Apply for a bespoke rate from HMRC and include the payments in a P11D form

2. Pay or reimburse your employees' actual vouched (receipted) expenses

Using the published scale rates is usually the simplest approach as it avoids the need for detailed expense claims and receipts for every meal and journey.

When to Consider the Special Rules

The special tax rules for foreign travel should generally be considered only after you've checked whether the expenses qualify under the normal UK business travel rules. If expenses already qualify for relief under the general travel expenses rules, you may not need to use the special foreign travel rules at all.

However, in cases where ordinary commuting rules or permanent workplace rules would prevent a deduction under normal rules, the special foreign travel rules can provide valuable relief that wouldn't otherwise be available.

Sources

This article provides general guidance based on current HMRC rules. For advice specific to your situation, speak to your accountant.

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