Combining a business trip with a holiday: the tax

Q: How does this work in practice?

Illustration only. An employee flies to Lisbon on a Sunday for a conference running Monday to Wednesday and stays on until the following Sunday. The employer books the return flight for £400 and all seven hotel nights at £150 a night. The flight is needed to attend the conference and stays exempt even though the return is four days later, provided the fare is no higher than for a Wednesday return. The Sunday, Monday and Tuesday nights are needed for the conference and are exempt. The Wednesday to Saturday nights, £600, are private. Because the employer contracted for them, they go on the P11D and the employer pays Class 1A of £90. If moving the return flight had cost an extra £80, that would be taxable too. Had the employee paid the extra hotel nights at checkout, the employer would have had nothing to report.

If the trip is genuinely needed for work, the employer can still pay the outward and return travel tax free when the employee adds a few days of holiday, because the travel rules do not require the cost to be wholly and exclusively for business. What becomes taxable is the cost of the private part: extra hotel nights, meals and travel during the holiday, any extra fare caused by changing dates, and anyone who comes along. If the business element is only a token, the whole trip is a taxable benefit.

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Why can the flight stay tax free if the employee stays on?

Employees get relief for travel under sections 337 and 338 ITEPA 2003, and HMRC’s Employment Income Manual at EIM31660 notes that the wholly and exclusively test does not apply to travel expenses. The question instead is whether the cost is attributable to the employee’s necessary attendance at a workplace, which for a business trip is usually a temporary workplace.

HMRC’s own example at EIM31811 is an employee sent to New York for two weeks who spends a free weekend in Boston. The flight to New York and other necessary travel costs are deductible, and the fact that the trip is no longer wholly for business does not change that. The costs of the Boston break, including getting there and staying there, are not deductible because they are not attributable to attending the temporary workplace.

When the employer pays an amount the employee could have deducted, section 289A makes it exempt from tax and National Insurance and it does not go on a P11D. So for a combined trip the employer needs to separate the business costs, which are exempt, from the private ones, which are not.

Which costs become taxable?

Anything that exists only because of the holiday. Typically:

hotel nights after the business has finished, or before it starts, that the work did not require;
meals, car hire, excursions and travel during the holiday days, including a side trip to another city;
any fare difference or change fee caused by moving the return date for personal reasons;
scale rate subsistence paid for days that are not business travel;
the travel and extra costs of a partner or family member, covered on our page on a spouse travelling on business.

HMRC’s guidance on subsistence at EIM31815 limits relief to costs that are additional and incurred in the course of the business journey. Meals on a day spent sightseeing are not.

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When does the whole trip become taxable?

Section 338 does not allow travel that is for practical purposes substantially private travel. If the real purpose is a holiday, adding a meeting does not change that. HMRC’s guidance at EIM31960 says inserting a token business element, such as a meeting that could just as well have taken place at the employer’s UK premises, does not make the travel necessary, and inspectors are told to be wary of trips to desirable locations unrelated to the purpose of the trip.

The courts have taken a strict line. In Owen v Burden a county surveyor was refused relief for a road conference in Tokyo he chose to attend, and in Thomson v White a farming company director was refused the cost of visiting farms in America. Incentive trips are a separate category: EIM31970 treats so called conferences that are mostly social as rewards, and in HMRC’s example of a seven day sales conference in Marbella with only two formal sessions the whole benefit is taxable.

A good test is whether the employee would have had to make the journey on those dates if there were no holiday. If yes, the travel is business and only the extras are taxable. If the dates or destination were chosen for the holiday and the business was fitted around it, expect HMRC to treat the travel as private.

Can the cost be split by the number of days?

No. EIM31965 says HMRC should not accept an apportionment of the total cost on a percentage basis according to time spent on business and non business activities, because there is no basis for it in law. Each expense is looked at on its own: the flight is either attributable to the business attendance or not, and each hotel night is either needed for the work or not.

The same marginal approach applies to training. On a genuine residential course followed by a golfing weekend paid by the employer, EIM01250 says travel and course costs stay exempt and only the cost of the golfing weekend is taxed.

How is the taxable part reported?

It depends on who contracts and pays, as HMRC’s employer guidance on travel and subsistence sets out for private travel:

Arrangement	Treatment
Employer arranges and pays	Report on P11D and pay Class 1A National Insurance
Employee arranges, employer pays the supplier	Report on P11D and collect Class 1 National Insurance through payroll, but not PAYE tax
Employee pays and is reimbursed	Earnings: deduct PAYE tax and Class 1 National Insurance through payroll

The Class 1A rate for 2026 to 2027 is 15%. See our pages on benefits in kind and the P11D and Class 1A National Insurance. The simplest approach is often for the employee to book and pay for the holiday nights directly, leaving nothing to report.

How does this work in practice?

Illustration only. An employee flies to Lisbon on a Sunday for a conference running Monday to Wednesday and stays on until the following Sunday. The employer books the return flight for £400 and all seven hotel nights at £150 a night.

The flight is needed to attend the conference and stays exempt even though the return is four days later, provided the fare is no higher than for a Wednesday return.
The Sunday, Monday and Tuesday nights are needed for the conference and are exempt.
The Wednesday to Saturday nights, £600, are private. Because the employer contracted for them, they go on the P11D and the employer pays Class 1A of £90.
If moving the return flight had cost an extra £80, that would be taxable too.

Had the employee paid the extra hotel nights at checkout, the employer would have had nothing to report.

Does it make a difference if the trip is abroad?

The same principles apply in the UK and overseas, and HMRC’s guidance on overseas conferences and study tours expects an itinerary showing precisely what activities took place. Incidental overnight expenses such as phone calls home can be paid tax free up to £10 a night abroad, but only for nights that are part of the business trip; see incidental overnight expenses. Separate, more generous rules for family travel apply to employees working abroad for long periods, covered on our page on travel for employees posted abroad.

What mistakes come up most often?

Apportioning the whole trip by days instead of identifying the extra private costs.
Leaving holiday hotel nights on the company card and omitting them from the P11D.
Treating a trip planned around a holiday, with a meeting added, as business travel.
Keeping no itinerary or agenda to show what the business days involved.
Forgetting that a partner’s travel is taxable unless their presence is genuinely needed for the work.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 24 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.