Overseas business expenses

By Tolley in association with Philip Rutherford
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The following Employment Tax guidance note by Tolley in association with Philip Rutherford provides comprehensive and up to date tax information covering:

  • Overseas business expenses
  • Introduction
  • Travelling overseas
  • Overseas scale rates
  • Key tests for overseas travel
  • Travel to work outside the UK ― first and final journeys
  • Interim journeys
  • Overseas accommodation and subsistence
  • Travel by spouse and / or children
  • Other costs of overseas travel

Introduction

There are special rules for employees who perform their duties overseas and also for employees who come from overseas to work in the UK. The rules relating to overseas business expenses have a number of specific tests.

This guidance note relates to the expenses of those individuals, not their residency status for tax purposes which may also need to be considered. For more about these aspects of the employee’s tax status, please refer to the Residence and domicile ― effect on tax liability guidance note.

Prior to considering the special rules for overseas business expenses, first consider the travel and subsistence rules explained in the Travel expenses and Subsistence expenses guidance notes. If an expense is allowable under these rules then there is no requirement to consider the tests for overseas business expenses, eg there is no requirement to look at the residence or domicile of an employee under those rules.

ITEPA 2003, s 341; ITEPA 2003, ss 370–371

HMRC publishes some useful guidance in 490: Employee travel .

Travelling overseas

It is likely that the majority of overseas travel will be covered by the usual rules for performance of duties and for necessary attendance (see the Travel expenses guidance note).

For example, an employee is required to visit a client overseas in order to do some work. Under the general rules, all of the travel and subsistence expenses (subject to those being allowable expenses under those tests) are allowable expenses for the employee. There is no need to consider the more specific tests under the overseas business travel legislation.

If an employee is required to travel to an overseas conference, consider whether it was necessarily incurred in the performance of the duties of the employment. If it was not, it is also unlikely to qualify for a deduction under the special

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