Upgrade fees tax-deductible (from PAYE)?
 

(I promise I looked for a 'proper' home for this question, but I drew a blank, so you lucky folks get to read it first. I shan't be upset if it gets shunted off somewhere else).

I travel for business, for which my employer pays through the expenses system. I am fully reimbursed for the allowed class of travel.

However sometimes I like a bit of comfort so I pay the fare difference between the allowed class and a higher class. This is not reimbursed by the company.

Does anyone know if these upgrade fees are claimable through my individual tax return? My reading of the HMRC rules are that they are; it is the purpose of the journey which is important, not the class of travel.

And finally, does anyone have experience of the process? Do HMRC frown on it/make it difficult, or is it quite straightforward?

I'm not an accountant, but I'd be very surprised if this was an allowed deduction. Can you point us to the rule where you think it would be included? I hope I'm wrong because I also sometimes pay for an upgrade out of my own pocket (AUP or UUA taxes).

As to how you'd declare it, I guess it'd be on the standard "non-reimbursed expenses" section of your self-assessment.

I remember reading HMRC guidance that pretty much said that unless the travel was wholly egtravagant (they used the example of a horse and carriage) that they would allow the deduction. I see no reason why you could not claim this back - your employerbis paying the base fare and your paying the upgrade. As Paralytic states, it is an unreimbursed expense

Not sure what 'wholly ant' travel is, but an employee can only deduct expenses 'wholly exclusively and necessarily' incurred for the purposes of the employment. The 'necessarily' bit is the killer - wanting that bit of extra comfort you get outside Y isn't good enough. The HMRC rule of thumb is: if it was a proper business expense the employer would have paid for it. Accordingly very few deductions for amounts incurred by the employee are permissible.

I don't think you would be able to claim this through tax return. As stated above if it was a necessary expense then the employer would have paid it.

Given that HMRC refused my expense claim for an early passport renewal (5 years before expiry due to existing one being full of work visas and stamps) I've often wondered how one gets to expense anything over WT travel. In their draconian eyes, surely the comfort of WT+ or even CW would not be considered "wholly and necessarily" a business expense? After all, WT will still get you to your meeting....

(Just for the record, I'm not supporting this view, but I'm curious how I've never been challenged on class of travel when so many other quite legitimate - in my view - business expenses have been refused).

Ohh for heaven's sake. Take it nobody read my comment. In any event please read the HMRC guidance


https://www.gov.uk/government/upload...321897/490.pdf
How do you guys think employer pay for J travel? Do you think they are paying tax on that amount too?

Class of travel in terms of commercial airlines is of no significance. What is of significance here is whether or not the employee is entitled to reclaim the "add-on" amount. I would suggest that, based upon the above, they are since it makes no odds if an air-fare is made up of one component (full-J) or two tickets (W+ with J Upgrade).

The difference between a passport renewal and a business class flight is that a passport would not be wholly and exclusively for work purposes (similarly railcards are not tax deductible as they can be used by the individual for personal travel)

I read your comment, but though your question is right, the conclusion is wrong. If you look at HMRC guidance on employees claiming deductions they say it is for amounts that 'must' be incurred. So if someone has to get to New York to see a client but the employer won't pay for a ticket the employee can deduct the ticket cost, and you are right that it would not matter whether the employee could have got a cheaper ticket in a lower class of travel or on another airline. But in OP's case the employer provides a ticket that OP chooses to upgrade. This isn't something that OP 'must' do so it isn't deductible.

Sounds like twisted logic to me. The guidance is dealing with the issue of what class of travel can be re-imbursed. It does not deal with whether it can be an upgrade or not an upgrade, or whether an upgrade is only allowable if paid for by the employer.

Further, nothing in that guidance that I understand refer to "must" being incurred or expenditure being limited to circumstances where the employer does not provide the ticket. It deals with "wholly, necessarily and exclusively" being the test and the guidance would seem clear that First class travel (however paid for) meets that test.

What the guidance on this point is concerned with is whether the journey or expenditure is necessary not who paid for it! There are some parts of the guidance which depend upon who paid for the expenditure but this is not it.

https://www.gov.uk/tax-relief-for-em...night-expenses

Is the dumbed down version.

I'd have thought the problem here would be the potentially large claim that's being made against a comparatively small tax liability means it's going to get red flagged.

The £60 uniform washing deduction or a £200 professional membership fee is a whole different kettle of fish to someone claiming £2,000 for 4 flight upgrades.

EGtravagant, indeed.

Etihad, Emirates et al have their fleets of sleek limos.

BA could corner the market in extravagance by carting (literally) its premium passengers out to Heathrow from a pony-yard somewhere in the East End (LCY, perhaps!!!). They could even set up a stage-coach service, to whisk its passengers in from the countryside in Victorian splendour.

Surely HMRC would first require that you sought reimbursement from your employer/contract-giver?

Enter it as expenses in employment on your next tax return and attach a note explaining the circumstances, together with original receipts and your calculations of your losses. You will then get a ruling. If it's in your favour, you will know where you stand. If it's not allowed you might consider appealing it, depending on what the response says and the rule it cites.

In principle there is no reason why higher class of travel should be disallowed. In your case, however, the issue will probably be the fact that your employer does not deem the upgrade necessary. The cost of the upgrade is therefore not "wholly and necessarily incurred" in your job but is discretionary expenditure on your part. If you can demonstrate that (a) you do need to fly in CW for work-related reasons, and (b) there is some particular reason why tne cost is not met by your employer, then you have a fair case and a reasonable prospect of winning. I was in a similar (but not identical) position involving conference travel. It was a protracted exchange of correspondence but eventually the claim was allowed and thereafter, every year until retirement, I was able to cite the ruling without having to argue the case afresh.

Upgrade fees tax-deductible (from PAYE)?
 

I do deduct this from my tax bill. It has not been challenged yet.

Thank you, c-w-s, the voice of sanity...