Oxfordshire Business owners warned over ‘bleisure’ travel tax risks as HMRC scrutiny increases

With summer approaching, typically one of the busiest periods for travel, business owners are being urged across Oxfordshire, to take greater care when claiming travel expenses through their companies.

With business travel expected to reach record levels this year, from international conferences and overseas client meetings to trips across the UK, the structure of these trips is evolving. As a hub for professional services, academic conferences and globally connected businesses, Oxfordshire sees a high volume of both domestic and international travel, increasing exposure to the growing trend of extending work trips for personal use, known as “bleisure” travel.

While this can offer both practical and financial benefits, Chartered Accountancy firm Ridgefield Consulting warns it is also contributing to growing confusion around what expenses can legitimately be claimed through a business.

With increased scrutiny from HM Revenue & Customs, errors can be costly and may result in penalties, interest on unpaid tax, or further investigation.

Business or bleisure? Where the line is drawn

Where a trip is undertaken solely for business purposes, a range of costs may be allowable under HMRC rules, provided they are incurred “wholly and exclusively” for the purposes of the trade.

This can include:

• Travel costs such as flights, train fares, and business mileage
• Accommodation where an overnight stay is necessary for business purposes
• Subsistence costs, including reasonable meals and refreshments while working away from a normal place of work
• Conference or event fees directly related to business activity

However, once any personal element is introduced, such as extending the trip or bringing family members along, the tax treatment becomes more complex, and not all previously allowable costs will remain deductible.

This is where “bleisure” travel creates uncertainty. By combining business and leisure within the same trip, it becomes more difficult to clearly distinguish between expenses incurred for business purposes and those relating to personal use.

While a business meeting or event may justify the need to travel, it does not automatically make the entire trip tax-deductible when personal time is added before or after the business activity.

Where errors commonly arise

Several areas consistently create difficulty when structuring or claiming travel expenses.

• Flights: Where a trip includes both business and personal elements, only the proportion attributable to business use may be allowable. Where a trip is primarily a holiday with incidental business activity, the deductibility of travel costs may be limited.
• Accommodation: Hotel costs may be claimed where they are required for business purposes. However, any additional nights taken for leisure must be funded privately. Where trips are extended, costs should be apportioned on a reasonable basis.
• Family members: While family members may accompany a business traveller, their travel and accommodation costs must be treated as personal expenditure and excluded from any business claim.
• Meals and subsistence: Subsistence costs may be allowable where they arise as a consequence of business travel to a temporary or irregular location. However, entertainment, leisure activities, or non-essential dining cannot be included.

Practical steps to reduce risk when claiming travel expenses

While the rules around business travel are well established, the practical difficulty for many business owners lies in applying them when trips include both personal and business elements. Here are three key considerations to help business owners stay compliant and avoid unnecessary fines or surprise tax bills.

1. Establish and document the primary purpose of the trip at the outset

Before booking travel, it is important to clearly define and evidence the business purpose of the trip. This includes identifying the specific meetings, conferences, or client engagements being attended, and ensuring this is well-documented.

If you are aware that a trip will include personal time, this should be recorded separately from the outset, rather than being identified later, when it will become harder to distinguish, which is vital when separating business and personal costs.

2. Separate costs in real time, not retrospectively

One of the most common issues arises when business owners attempt to separate costs after the trip has taken place. This can lead to guesswork and errors, which weakens the supporting evidence for business expense claims.

Where trips include both business and leisure components, costs such as accommodation, flights, and subsistence should be clearly allocated at the point of booking or as they are incurred. Maintaining accurate records, including invoices and notes on business activity, strengthens the audit trail and supports compliance if reviewed by HMRC.

3. Maintain robust digital records in line with Making Tax Digital requirements

The increasing rollout of Making Tax Digital is expected to further change how businesses manage and submit expense information and increase transparency.

More businesses are being required to be MTD compliant with more frequent reporting requirements. While this is designed to improve accuracy and reduce errors, it also means that inconsistencies in expense categorisation are more likely to be identified and flagged.

This makes it increasingly important to ensure that travel expenses are clearly recorded, properly categorised, and supported by consistent documentation throughout the year, rather than being reconstructed at year’s end.

Simon Thomas, Managing Director of Ridgefield Consulting, commented:

“Many business owners understand that travel costs can be claimed when incurred for business purposes. However, as we move further into a hybrid working world, where trips increasingly combine both business and leisure, the distinction between allowable and non-allowable expenses is becoming less clear. This lack of clarity not only raises the risk of incorrectly claimed expenses but also increases the likelihood of fines or, in the worst-case scenario, HMRC investigations.”

“A common misconception is that the presence of a business meeting or event allows the entire trip to be treated as deductible. In reality, only costs that are directly attributable to business activity can be claimed.”

“Where personal elements are introduced, it is essential that costs are clearly separated and documented to ensure compliance and unexpected tax liabilities.”

As we head into the summer months, business travel patterns continue to shift, with an increasing number of trips blending work and leisure into so-called “bleisure” travel. In this changing landscape, it is more important than ever for businesses to take a structured approach to managing travel expenses.

With regulatory scrutiny increasing and reporting requirements becoming more digitalised, clear separation of business and personal costs, accurate apportionment, and robust record-keeping are essential to ensure compliance with HMRC requirements. As this trend continues, the distinction between business travel and “bleisure” travel is expected to become increasingly significant for businesses of all sizes.

ENDS