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Foreign Business Travel Expenses

Posted 20 Aug 15

If you are the owner of a successful and vibrant company, at some point you will be seeking new ways of developing your business.

Trading in a global economy gives you an opportunity to involve foreign investors, discover entirely new target market for your services and products and find a client base which can help you find new ways of marketing and establishing your offer.

Sometimes, making a business trip abroad will require travel. Most business owners understand the basic rules of domestic travel - saving transport receipts, claiming business miles, etc. However, international business travel can be slightly different and it’s important that before you make a decision of going abroad, you understand how your expenses and allowances work.

The same rules apply for all your business expenses abroad and domestic travel. You can claim them if they are “wholly and exclusively” for business purposes. Remember to keep the proof of purchase of a product you would like to claim your tax off, so always ask the seller for the receipt.

It can be tempting to mix business with leisure when travelling abroad and because of that, HMRC’s eligibility requirements for expenses abroad are much stricter than home. It is possible to enjoy all the entertainment the place you travel to offers, however, you cannot claim it back. If you would like to sightsee a historical town or bring your spouse with you, you will need to pay for it from your own pocket.

If you have made a foreign purchase for business purposes and lost your receipt, HMRC has a list of subsistence rates for every country in the world, including major cities. It’s important that you understand that those proposed rates aren’t allowances and you can only claim the amounts suggested by HMRC if you incur expenses up to that amount.

Those rates can become tricky when you travel regularly and exchange rates change. The simplest way to avoid mistakes when claiming your expenses is by always using the amount that left your bank account.

If you travel abroad, you are most likely to bring back a bag full of souvenirs. Before you travel, we advise you check the prices of products which might be beneficial for your business, starting with office supplies and ending with products specifically designed for your business type. Before you purchase any of them, make sure you understand their legality status.

If you purchase a business asset, you can reclaim the sales tax. Many countries allow foreign visitors to reclaim it, either when they leave the country or during the purchase. When you return to the UK, you will need to declare the assets you’ve purchased abroad and pay any applicable VAT.

If you are a company owner, director or employee travelling for business purposes abroad and are not sure how expenses and allowances work, contact our experts at Tawanda Accountants today and we will be happy to guide you through all the details, quirks and ambiguities that might occur.