Visa Costs
Overview 🛫
Many startups hire employees from abroad and cover their visa costs when they relocate to the UK. While this feels like a straightforward business expense, HMRC applies different rules depending on the individual’s circumstances.
âś… Tax Treatment
The treatment depends on whether the individual is outside or already in the UK when the visa costs are paid.
- Outside the UK
- No liability to income tax or NICs arises for the individual.
- HMRC treats the visa costs as travel-related and therefore an allowable business expense.
- Already in the UK
- Payments or reimbursements by the employer are treated as a taxable benefit.
- Subject to income tax and NICs (reported via payroll or year-end P11D).
- HMRC argues these costs are not “in the performance of employment duties” and therefore not deductible for the business.
🔍 HMRC’s Position
- For individuals outside the UK, visa costs are seen as incidental to business travel.
- For individuals already in the UK, HMRC views visa costs as personal, not incurred for employment duties, and therefore not allowable for tax.
đź’ˇ Practical Point
Employers should assess visa costs on a case-by-case basis. The key determinant is the location of the employee at the time the visa cost is paid. Recording this clearly will help ensure correct reporting.