Accommodation costs are an allowable expense if incurred in relation to qualifying business travel.

So if a limited company contractor works for a client in a temporary location for 9 months and they stay in a hotel during the week, going home to their permanent home at the weekends, the hotel costs are allowable as long as the location remains a temporary workplace with the travel allowable.

If you are away for a period of time in the same location it may be cheaper for the limited company to rent temporary accommodation rather than paying for a hotel.

This is fine as long as the cost of the accommodation is at an appropriate level for the needs of the business. It must not be excessive and should represent better value to the company than hotel accommodation.

You should make sure that the rental agreement / invoices are made out to your limited company rather than you personally.

What if you stay at relatives or friends and pay them a fee for providing temporary accommodation?

You can pay them a fair market rate for providing the accommodation. It must still be in relation to travel to a temporary workplace and it should represent better value to your company than a hotel.

You also need to ask them to give you invoices, made out to your company, for the rental costs.

In order to be able to claim these accommodation costs you must have a permanent principal residence elsewhere which will be your main home address – i.e. the accommodation costs should not represent your main place of living.