My business requires me to spend up to 100 days a year away from home speaking at conferences. I always travel first class, to allow me to prepare notes on the train, and stay in four-star hotels. The Tax Inspector has said my expenses are excessive and I should only get a tax deduction for the cost of second class travel and two-star hotels. Is he correct?
The Tax Inspector is not correct. His own Employment Income Manual at paragraph EIM 31835 says: “The tests that apply to travel expense relate to the nature of the expense and not to the amount.” It goes on to say: “You should not refuse a deduction for first class rail travel, if that has been incurred, on the basis that the same journey could have been made more cheaply in standard class”. As long as the travel and hotel costs were incurred wholly and exclusively for your business of lecturing the full cost is tax-deductible.