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Working On Your Holiday – Allowed For Tax?

Now that lock-down has eased and countries are slowly reopening the borders we all need and deserve a holiday. Nevertheless, you might still choose to use this opportunity to meet a client or join a conference during your vacation.

The basic rule for an expense to be tax allowable it needed to be incurred wholly and exclusively for business purposes. However, sometimes when incurring business costs, there can be personal costs incurred within these elements. In this blog we will advise on what costs incurred during this trip would be allowable to be claimed through your business

Private elements on a business trip

Let’s have a look at this scenario: You have to travel a 250 miles to meet a client. You book a hotel to stay overnight, and the next day you visit the museum for your own entertainment purposes.
It is clear that the expenses incurred while travelling to the museum count as a private journey and will not be tax-deductible. As long as the primary purpose of the trip is business, then it is fine to add activities or even extend your stay for personal reason in a hotel – provided you don’t claim for the holiday portion. If you decide to bring your spouse but they’re not a business partner or employee, then all you have to do is separate the cost; your spouse’s flights will be disallowed but your flight will be allowed and so on.

Turning a holiday into a business trip:

This is the only time where you absolutely cannot claim expenses against your income. When you go on holiday and the purpose of the trip is personal but then you decide to do some business while over there, you’ve lost your right to claim any expenses. Because the purpose of the trip is personal, you can’t claim any of the cost incurred while doing business such as the hotel stay or flights. If you can clearly demonstrate that a holiday has finished and you continue travelling for business purposes then these additional costs would be claimable.

It is clear from the above that if you plan to incur business costs while on a personal trip, it is very important to keep proper records, notes and also board minutes to document the main reason for the trip.