Claiming Accommodation Expenses When Working Away: A Practical Guide

When accommodation away from home is a business expense

If you have to stay away from home to do your job, the cost of that accommodation can usually be claimed as a business expense. The principle HMRC applies is that the cost must be incurred wholly and exclusively for the purposes of the business, and the trip itself must be genuine business travel rather than ordinary commuting.

The classic case is a contractor or employee sent to a temporary workplace for a project, who can't reasonably travel home each night and so needs somewhere to stay. The accommodation is a direct consequence of the work, which is what makes it allowable.

Claiming accommodation expenses when working away is well-trodden ground, but the detail matters, and the right approach depends on whether you're an employee, a director of your own limited company, or self-employed. This is general guidance, not tax advice, so check your own position with your accountant or against HMRC's current rules.

The temporary workplace test that underpins it all

The reason most working-away accommodation is allowable is the temporary workplace rule. Travel and subsistence, including accommodation, to a temporary workplace can qualify as business expenses, whereas travel to a permanent workplace is treated as ordinary commuting and isn't claimable.

Broadly, a workplace is temporary if you attend it for a limited duration or a temporary purpose. There's an important catch known as the 24-month rule: once you expect to be at a single site for more than 24 months, or it makes up substantially all of your working time, it can be reclassified as a permanent workplace and the relief stops.

This is the test that most often trips people up on long projects, so it's worth understanding before you commit to a lengthy posting and worth confirming with your accountant if your assignment approaches that horizon.

Reasonable, not lavish

HMRC expects accommodation costs to be reasonable for the circumstances. There's no fixed national cap, but the spend should be appropriate, somewhere sensible to stay near the work, rather than indulgent.

A serviced apartment or a mid-range hotel close to a temporary site is the kind of cost that sits comfortably within reasonable. For longer stays, a serviced apartment with a kitchen and laundry often works out more cost-effective than weeks of hotel nights, which also helps demonstrate the claim is sensible.

The watchword is proportionate. If a cost would look excessive to an outside observer for the job being done, expect questions, so keep the choice defensible and matched to the length and nature of the assignment.

What counts alongside the room

Accommodation rarely travels alone on an expense claim. Related subsistence costs incurred because you're staying away can often be claimed too, provided they're reasonable and properly evidenced.

Exactly what's allowable and how it's treated differs between employees, company directors and the self-employed, and some items have their own rules, so this is an area where it pays to confirm the detail for your situation rather than assume.

• check_circleThe accommodation itself, the room or apartment rate
• check_circleReasonable meals and subsistence while staying away
• check_circleNecessary travel to and from the temporary workplace
• check_circleSometimes incidental overnight expenses, which have their own HMRC limits

Records: the part that makes or breaks a claim

A claim is only as strong as the paperwork behind it. For every stay you want to keep a valid invoice or receipt showing the supplier, the dates, the amount and, where applicable, the VAT. You should also be able to show why you were away, which project, which site and over what dates, so the business purpose is clear.

Keep these records for the period HMRC requires, which is several years, and store them somewhere you can retrieve them if asked. The cleaner the trail, the faster any review goes and the less likely a genuine cost is challenged.

A booking confirmation, a clear invoice and a simple note of the assignment dates together make a claim that stands up without fuss.

Why a clear VAT invoice matters so much

If your business is VAT registered, a proper VAT invoice from the accommodation provider is what lets you recover the VAT on the stay, which can be a meaningful saving over a long booking. To reclaim it you generally need an invoice showing the supplier's VAT number, the amount of VAT charged and the usual invoice details.

A vague receipt, or a booking through a channel that doesn't issue a compliant VAT invoice, can leave you unable to recover that VAT and slower to get the expense approved internally.

This is exactly why booking accommodation that issues a clear, itemised VAT invoice in the company's name makes claiming accommodation expenses when working away so much simpler, the document does the heavy lifting for both your tax position and your internal approvals.

Common pitfalls to avoid

Most problems are avoidable. The frequent ones are letting a site quietly pass the 24-month threshold and continuing to claim, mixing in clearly personal costs, and losing or never obtaining a proper invoice.

Another is assuming the rules are identical whether you're an employee, a director or a sole trader, when in fact the treatment and what you can claim differ. Booking through a route that won't give you a VAT invoice is a quieter pitfall that only shows up when finance asks for the paperwork.

Get the basics right, a genuine temporary workplace, a reasonable cost, and a clean invoice you've kept safe, and accommodation while working away is one of the more straightforward expenses to claim. When in doubt on your own circumstances, take advice from your accountant rather than guessing.

Frequently asked questions