If you are staying away from home for work, the obvious question is whether the bill counts against your tax. In short: contractor accommodation is usually tax deductible when the stay is genuinely for business and the location is a temporary workplace, so a short let or serviced apartment can be an allowable business expense in the same way a hotel would be. The detail matters, though, because HMRC has specific rules on what qualifies, how long you can claim, and how VAT works. This guide explains the principles in plain terms. It is general information, not tax advice, so check your own position with an accountant.
This article is general guidance on how the rules work. Your circumstances, trading structure and contract all affect what you can claim, so treat it as a starting point and confirm with a qualified accountant or HMRC before you file.
The basic test: wholly and exclusively for business
The foundation of every business expense in the UK is the same. To be deductible, the cost must be incurred wholly and exclusively for the purposes of the trade. Accommodation you take because a job requires you to work away from your normal base clears that test; a stay you would have taken anyway, or one that mixes in a holiday, does not. The moment there is a private purpose bundled in, the claim gets complicated, which is why a clean, work-only booking with a proper invoice is the simplest position to defend.
The temporary workplace and the 24-month rule
For most contractors the key concept is the temporary workplace. Accommodation and travel to a site are allowable when that site is a temporary workplace rather than your permanent base. A workplace stops being temporary once you expect to be there, or actually are there, for more than 24 continuous months, or where you spend more than 40 percent of your working time. Once that 24-month expectation is crossed, the site is treated as a permanent workplace and the accommodation is no longer claimable. HMRC sets out the travel and overnight expense rules on gov.uk, and the same temporary workplace logic underpins accommodation claims.
How the claim works by trading structure
The route the claim takes depends on how you trade.
| Structure | How accommodation is claimed |
|---|---|
| Sole trader / self-employed | Deducted as an allowable expense against your trading profit on your Self Assessment, provided the stay is wholly and exclusively for the business. |
| Limited company director | The company pays or reimburses the cost. When the site is a genuine temporary workplace, it is an allowable company expense and not a taxable benefit in kind for the director. |
| Umbrella company contractor | Options are narrower. Since the 2016 rules, many umbrella workers under supervision, direction or control cannot claim travel and subsistence, so check with your umbrella provider. |
Whichever applies, the accommodation still has to pass the temporary workplace and business-purpose tests. The structure changes the mechanism, not the underlying rule.
Can you reclaim the VAT?
If your business is VAT registered and the accommodation is a business cost, you can generally reclaim the VAT charged on it, so long as you hold a valid VAT invoice addressed to the business. This is one practical advantage of booking serviced accommodation that invoices the company directly rather than paying personally and claiming back, because the paperwork is clean from the start. We cover the invoicing and VAT side in detail in our guide to expensing contractor serviced accommodation in Bromley.
Records you need to keep
A claim is only as strong as the evidence behind it. Keep the booking confirmation and a VAT invoice in the business name, note the project and the dates, and be able to show the site was a temporary workplace. If HMRC ever asks, that paper trail is what turns a claim into a settled matter rather than an argument. Serviced operators that deal with business guests will provide a single itemised invoice for the whole stay, which is far easier to file than a stack of receipts.
Where a short let has the edge over a hotel
From a tax point of view, a short let and a hotel are treated the same: both are allowable when the stay is for business. The difference is practical. A serviced apartment usually costs less per head for a team, includes a kitchen so subsistence costs fall, and bills as one clean invoice, which makes the whole expense simpler to record and reconcile. For how those nightly and weekly rates compare, see our guide to the cost of contractor accommodation per night in Bromley, and for the wider picture start with our complete guide to serviced accommodation for contractors. Current options are on the Bromley Short Lets homepage.
Frequently asked questions
Is contractor accommodation tax deductible?
Generally yes, when the stay is wholly and exclusively for the business and the site is a temporary workplace. In that case a short let, serviced apartment or hotel is an allowable expense. It stops being deductible once the workplace is expected to last, or does last, more than 24 months.
What is the 24-month rule for accommodation?
A workplace counts as temporary, and accommodation there is claimable, only while you expect to work at it for under 24 continuous months and spend under 40 percent of your time there. Once you expect to exceed 24 months, it becomes a permanent workplace and the accommodation is no longer allowable.
Can I reclaim VAT on serviced accommodation?
If your business is VAT registered and the accommodation is a genuine business cost, you can usually reclaim the VAT, provided you hold a valid VAT invoice in the business name. Booking accommodation that invoices the company directly keeps the paperwork clean.
Does it matter if I am a sole trader or a limited company?
The mechanism differs but the rule does not. A sole trader deducts the cost against trading profit; a limited company pays or reimburses it as a company expense. Either way the stay must be for business and at a temporary workplace to qualify.
Do I need to keep receipts?
Yes. Keep the booking confirmation and a VAT invoice in the business name, and record the project and dates. Good records are what support the claim if HMRC asks, and a single itemised invoice from a serviced operator makes that straightforward.