If you’re working as a contractor, you will likely incur expenses as part of your travel. This could be the cost for fuel, buying tickets, or fares for taxis. These expenses are separate from tax and VAT, so they’re treated differently. Here is how you can invoice for travel expenses in the right way so it’s calculated and filed correctly. To invoice you must first determine which travel expenses can be claimed,
Which Travel Expenses can be Claimed?
The main rule when claiming any expenses is that it’s incurred in the performance of the employee’s job as it relates to the business. This means that as an employee they should be the one that gains financially from the claim for expenses and not the business. There are many areas of travel where expenses are claimed:
● Travel Cost – This includes spending on travel tickets for planes, trains, etc. plus hotel costs and other fees associated with those expenses.
● Subsistence – This expense related to any food or drink consumed during the time the person is traveling.
● Other Costs – Claims for other expenditures such as entertainment while traveling.
There may also be other things that apply as part of expenses. Most businesses have a guide to claiming travel expenses that can be used for reference. This guide needs to be kept up to date with changes to the rules.
What Cannot Be Claimed as Travel Expenses
As well as knowing what is claimable, it’s also important to understand what has not deemed travel expenses. These may seem straightforward, but it can be difficult to separate different aspects if someone is new to making a claim.
● Traveling to Your Office – Any traveling to and from the usual place of work is not counted as travel expenses. However, if traveling temporarily to another office, then a claim can be made.
● Private Travel – Any travel undertaken that is not for work purposes does not become part of travel expenses. Even if the private trip is included while working away from the office.
For those that own a car, hire a car, or use a fleet car for travel: there will be a mileage allowance that will calculate how much to claim.
Payment of Travel Expenses
Expenses get paid in one of two ways. The one that a company chooses depends on what works best for them. It could be that a company will set up special arrangements with hotels or other travel companies to help with the cost. If this is the case, then these approved companies need to be used. For example, if a company has a fuel card for their fleet cars, then this may be set up for one particular fuel company.
The first way to pay travel expenses is by asking the employee to pay for the expenses upfront and then reimburse them afterward by way of a claim form. For many smaller companies, this is a better option and is the usual practice for many businesses. However, it’s important that the employee knows the list of things that they can claim to prevent them from being out of pocket.
The other option is for a company to give the employee a credit or spending card. These cards can make it easier for companies to keep a track of expenses and handle spending.
Whichever way the expenses are calculated and paid, it’s important that the employee keeps a record of their expenses for their own records in case of any discrepancies. This means keeping all the receipts for any expenses while traveling along with keeping emails sent as confirmation of payment. If employees can get into this habit, then it will make the travel expenses claims easier to process.