What expenses are included in T&E?
T&E expenses are the costs incurred for business travel, entertainment, and meals. And for SMEs, these expenses can be a tax deduction for your business and can reduce your taxable income to help lower your tax bill.
The HMRC defines these items as follows:
Travel expenses include any costs you incur to get from one place to another, including transportation and lodging, meals, and incidentals.
Entertainment expenses include any costs you incur for social or recreational activities; this includes food and drinks at restaurants or parties, tickets to sporting events, or other activities that help provide entertainment for employees or customers.
Meal expenses include any costs incurred when eating a meal at a restaurant or while traveling away from home on business. The most common example is meetings over meals with clients, where they can discuss business over food.
What are the best ways to report T&E for the next tax period?
To make sure you're following the rules, you need to know exactly what to report as T&E in your business, how it will affect your bottom line, and how you can properly report and account for it according to HMRC guidelines. Taxes, expenses, and capital allowances are three concepts that often need clarification. And you need to understand the difference between them and how they affect your business tax bill.
Taxes are payments made to the government for goods or services sold to customers. If you sell coffee, for example, you will pay VAT on each cup of coffee sold (and other taxes like income tax if you're a limited company).
Expenses are costs incurred by a business during its normal operations: rent, wages, and electricity bills are all examples of expenses. Read more about mileage expenses and per diems on our travel expense management page.
Capital allowances are deductions from profits that allow businesses to claim money back from HMRC for certain purchases of fixed assets such as computers or office furniture.
It's no secret that travel and expense (T&E) make up a major spend for many businesses. The good news is that more companies are adopting new technologies to help them streamline their T&E processes. They're using platforms like Payhawk that can support spend optimisation, like integrating VAT recovery on company receipts, for instance. Which ultimately leads to lower costs and less stress during tax periods.
T&E tracking and reporting made easy with automation
If you give your employees access to clever automated tools to submit receipts, receive per diems, track mileage, and all other expenses, they won't have to worry about long paper trails. So, no more filling out manual entry forms every time they want to get reimbursed for something related to work.
Utilising innovative, automated expense management software like Payhawk will not only help you streamline your business processes but also help your company save money on travel and other employee expenses. Expense reports and reimbursements are crucial parts of business travel. And the process of expense reporting and approval can be pretty tedious, especially when it involves reams of paper receipts.
As a finance manager, you want to ensure that your employees submit accurate and complete expense reports. This spend accuracy and visibility, in turn, helps you to properly manage your business costs while also helping you stay compliant with all the tax laws in your country.
With Payhawk, you can track and manage your company's T&E efficiently through our automated platform designed to help you:
- Easily streamline your travel and expense management process through a user-friendly interface that you can customise to your preferences.
- Use OCR technology to capture expenses directly (for example, when employees snap and upload a photo of their receipts onto the app). Thus, eliminating all manual entries and potential errors.
- Conveniently allow your employees to submit all required travel & expense reports on the go via the mobile app. (The platform even chases them to upload missing receipts!)
- Incorporate corporate visa cards to help control your company spending and manage business cash flow like a pro.
Looking for a better way to manage travel and expenses for your company? Book a demo today.