Business Travel Trends in 2024: Why Day Count Compliance Matters More Than Ever
Global business travel has experienced a seismic shift post-pandemic. From having all travel ground to a halt to the rise of hybrid work models, the nature of corporate travel has evolved. As companies now begin to redefine their travel policies, the implications of international travel on corporate tax compliance are growing in significance. Counting employee travel days to avoid unintentional tax residency and reporting liabilities is of strategic importance.
This post explores the current and future business travel trends and how they intersect with the importance of day counting for tax residency compliance. We’d invite business leaders and employees who travel frequently to read until the end for a chance to be part of transforming business travel reporting with Daysium.
The Current State of Short-term Business Travel
In 2020, global business travel came to a standstill due to the Covid-19 pandemic. Even though travel has slowly recovered, it looks different today.
The most notable stats tell the story:
The Global Business Travel Association research predicts global corporate travel reaching a record-spending of $1.48tn by the end of 2024.(1)
Short business trips, once a staple of corporate travel, are being replaced by longer stays, especially for international trips. HotelHub Index research showed that the length of international trips increased by 5.3% in the first quarter of 2024.(2)
Booking.com data found that the average length of business trips in Europe increased by 10% from 2019 to 2023, while it grew by 8.3% in North America.(3)
A Mastercard survey revealed that 53% of companies now allow short-term rentals as a viable accommodation option for employees.(4)
These changing dynamics are essential for corporations to consider, especially as employees travel across borders and into new tax jurisdictions.
The Role of Hybrid and Remote Work in Business Travel
The big shift after the pandemic has been in our workplace. A central office to gather all employees together every day is no longer a given for companies, big or small. While fully remote work has diminished since the pandemic, hybrid models have taken root. For instance, 26% of employees in the UK worked with a hybrid model as of June 2024.(5) This shift has broad implications—not only are employees splitting their time between home and the office, but they might also be travelling internationally to do so.
Business travel is no longer confined to meetings and conferences. Now, employees may be crossing borders to get to their office every few days of the week. These arrangements raise concerns for companies about payroll reporting obligations and tax residency compliance. Employees who regularly commute from one country to another—for work or business—may unintentionally trigger tax obligations that require day counting to maintain compliance.
The Rise of Digital Nomadism
The improvements in technology combined with the shifting company policies of allowing more hybrid ways to work have led to another shift: an increase in digital nomadism. The trend enables employees to work from anywhere in the world. While this flexibility is attractive to employees, it can create significant tax compliance challenges for employers. Employees who live in one country but work in another could unknowingly create payroll compliance and even tax residency implications for the company, and themselves.
Take, for example, the UK and how its tax authority, HMRC, treats non-resident directors (NRDs). UK companies with NRDs who spend time working in the UK have to operate payroll reporting and withholding duties — whether or not they pay the director. NRDs who perform their work fully remotely abroad may even risk creating issues with the company’s establishment. The UK entity could create a permanent establishment for corporate tax in the location where the NRD lives.
For companies, this requires a proactive approach to tracking day counts. Employees’ ability to lead a digital nomad lifestyle through flexible work arrangements could mean they travel more for work and leisure. This blending of personal and professional travel makes it even more critical for businesses to stay aware of how many days their employees spend in various countries.
Trends Shaping the Future of Business Travel
As companies adjust to this evolving landscape, several trends are driving the future of business travel. Let’s explore these key trends:
Health and Wellbeing: Employee well-being is now front and centre in corporate travel policies. In a post-pandemic world, ensuring the health and safety of travelling employees is more critical than ever. This includes considerations for mental health, travel-related stress, and the availability of flexible accommodations.
Sustainability: Environmental concerns are increasingly influencing corporate travel decisions. With employees and customers pushing for more sustainable practices, companies are looking at reducing their carbon footprint. Sustainable travel policies, including fewer flights and greener travel options, are becoming the norm.
Technology Integration: AI and automation are transforming how companies manage travel. Virtual meetings have significantly reduced the need for frequent travel, and advanced analytics are optimising the planning of necessary trips. Technology is shaping every aspect of corporate travel from booking smarter to calculating carbon footprints.
Compliance Challenges in Cross-Border Travel
In a globally mobile workforce, cross-border travel poses significant compliance challenges for businesses. Governments worldwide are tightening their tax rules, and failure to comply with tax residency regulations can have severe financial repercussions. Employees who frequently travel to different countries—for work or personal reasons—could easily trigger payroll and tax liabilities in multiple jurisdictions.
Companies need to ensure they count business travel days and check employee residency. International employees need to be managed to ensure compliance with all local tax and employment laws.
The challenge is not only for employers to maintain a clear and accurate record. Considering the impact of digital nomadism and hybrid work, educating employees in their own active role in day counting is vital for compliance. Employees may create unfortunate income tax obligations for themselves if they don’t monitor their work and leisure days spent in specific jurisdictions. To read more on the challenges in cross-border travel for work, you can explore our post ‘Case Study: Navigating Tax Residency Challenges with Daysium’. The case study looks at two Irish cases highlighting the need for immaculate records.
Without proper day count records, businesses and individuals might find themselves grappling with unexpected tax bills, penalties, and audits. A transparent and easy-to-maintain system for day counting can solve many compliance headaches.
Technology as a Solution for Compliance and Efficiency
Technology is playing an increasingly significant role in simplifying corporate travel management. AI and analytics tools are not just improving how businesses book and plan travel—they’re also critical for ensuring tax compliance. Tools that can log travel patterns, optimise itineraries, and integrate with payroll systems are essential in today’s business environment.
At Daysium, we are at the forefront of transforming day counting for tax compliance. Our platform helps individuals effortlessly manage their day counting with an automated logging system. Day counts are tailored based on individual needs, ensuring compliance with relevant legislation. Using Daysium means you’re not just creating an accurate count of days. You can also add corroborating evidence, which can be vital in establishing a distinction between work and leisure travel.
Planning Ahead: Strategies for Future Business Travel
Strategic planning is essential as businesses navigate the complex landscape of modern business travel. Here are three key steps to prepare for the future:
The Importance of Day Counting for Future Business Travel
Business travel is not going to disappear, but how, when and for how long we travel for work is transforming. As companies adjust to the hybrid work model and increasingly international workforce, day counting for tax residency compliance increases in importance. Maintaining robust records is a strategic advantage for companies and globally mobile individuals.
Daysium currently offers tools for HNWIs to manage their day counting. But we want to go further and ensure businesses can easily navigate this changing landscape. If you want to be at the centre of this change, we invite you to join our Enterprise waitlist for Daysium. Early adopters will be the first to get their hands on our corporate solution and be part of designing and testing the service. Join the waitlist here: https://scorecard.daysium.com/enterprise.
Daysium’s Senior Advisor, Paul Aplin OBE, has written a follow-up to his post on today’s data-rich world. Today’s post, “Beneath the Surface,” offers a deep dive into the complexities of tax information exchange. As governments worldwide enhance their data collection and analysis capabilities through agreements like Automatic Exchange of Information Agreements (AEOIs), understanding these changes is crucial, especially for globally mobile HNWIs. Keep reading for Paul’s insights.
Beneath the Surface
In my last blog for Daysium I looked at the data-wake most of us leave behind in this data-rich world we inhabit and at how we can intentionally or unintentionally reveal things of great interest to tax authorities.
Sometimes, for example if you need to prove where you were, what you did or perhaps even why, that data trail can be invaluable. At other times it can provide tax authorities with evidence of undisclosed tax liabilities.
In addition to the data that we make publicly available through social media and the data we record consciously, tax authorities have progressively gained access to vast quantities of data through Automatic Exchange of Information Agreements (AEOIs). They have also become extremely adept at using data analytics techniques and Artificial Intelligence (AI) to match data with the information that individual taxpayers have declared and to spot omissions and suspicious patterns.
The OECD Common Reporting Standard (CRS) has been implemented by over 100 tax authorities around the world and many have been exchanging information under it for 6 or 7 years now. The CRS requires participating tax authorities to gather information from financial institutions in their jurisdiction about non-resident account holders and to share that information with the jurisdiction where the account holder is resident. The required information is extensive, including sufficient details to reliably identify the taxpayer (name, address, date and place of birth, tax identification number) as well as the balance at 31 December of the relevant year together with the amount of any interest, dividends, distributions and gross proceeds from the sale or redemption of any financial assets.
The scope of the CRS has been extended to include Specified Electronic Money Products (for example, prepaid online accounts or physical cards that can be used to store money to pay for goods and services) and Central Bank Digital Currencies. In addition to this a new Crypto Asset Reporting Framework (CARF) is being added, recognising the fact that cryptoassets can be transferred and held without interacting with traditional financial institutions – and of course that this represents a significant risk of non-compliance. CARF will take effect in 2026 for HMRC.
Online platforms (for sales of goods, services and for property rental) are also now subject to cross-border reporting requirements. While HMRC already had the power to obtain information from UK based platforms, many overseas platforms will also have to provide details of transactions from 1 January 2024 (with HMRC expected to receive that information in early 2025).
Since 2016, HMRC has secured over £586 million of additional taxes through AEOI agreements.
A few years ago, exchanges of information internationally were specific to particular taxpayers and subject to a great deal of process; The CRS and FATCA (the US Foreign Account Tax Compliance Act) have changed things fundamentally; CARF will take that a stage further. Add in the processing power of modern computers, a deep knowledge of data analytics and AI and you have a radically different picture.
What was once occasional is now routine and what once took years can now be achieved in minutes.
It’s a very different world.
Today’s comprehensive tax information exchange between tax authorities requires robust record-keeping from individuals and businesses alike. If you’re looking to streamline and secure your tax residency data, consider Daysium. Our platform ensures accurate day counting and robust corroborate records, which are essential for maintaining compliance in today’s tax environment. Join the Daysium waitlist now to gain access to our innovative compliance tool.
Split Year Treatment and Tax Compliance: Best Practices
Navigating tax compliance can be particularly challenging for high net worth individuals (HNWIs) who are often globally mobile, spending considerable time in different countries for work or leisure. If you’re considering a move to or from the UK, it’s important to understand the UK split year treatment, which could significantly impact your tax obligations.
This guide explores the complexities of split year treatment and highlights the importance of precise day counting. Leveraging advanced automated tools can greatly enhance compliance, optimise your tax strategy, and reduce the risk of costly errors.
Understanding UK Split Year Treatment
Split year treatment is a UK tax system determining your tax obligations if you arrive or leave the UK during a tax year. You can only apply split year treatment if you’re considered to be a UK tax resident during the year of relocation.
If split year treatment is available, then you would be:
Taxed as a UK tax non-resident for the overseas part of the year (generally only subject to tax on UK sources of income) and,
As a UK tax resident for the UK part of the year (generally subject to tax on your worldwide income, subject to certain reliefs).
This regime is complex but critical for strategic tax planning. It’s essential to note that the date on which you split the year is determined by law and your specific circumstances, not by personal choice.
UK Statutory Residence Test (SRT)
The UK’s Statutory Residence Test (SRT) is fundamental to split year treatment. Established on 6 April 2013, the SRT helps determine your residence status for a given tax year.
The SRT considers the time spent and, in some cases, work conducted in the UK, along with your connections to the UK.
The test is divided into five parts:
Automatic Overseas Tests
Automatic UK Tests
Sufficient Ties Test
Application of the SRT to Deceased Persons
Split Years
There are eight ‘Cases’ under which you may qualify for split year treatment, three involving leaving the UK and five involving entering the UK.
Category
Cases
Leaving the UK
1. Starting full-time work overseas.
2. You’re a partner of someone starting full-time work overseas.
3. You cease to have a home in the UK.
Coming to the UK
1. You start to have a home in the UK only.
2. You start full-time work in the UK.
3. You cease to work full-time overseas.
4. You’re the partner of someone who ceases to work full-time overseas.
5. You start to have a home in the UK.
If you meet more than one case, a priority system will determine which applies and the effective date of the split year. The split year may not necessarily begin on your actual date of arrival or departure.
Eligibility
You can only use split year treatment if you are a UK resident under the SRT for that year. Non-residents for a specific year cannot use split year treatment and are only subject to UK tax on UK-sourced income.
There is no application process for split year treatment, so consider your circumstances before filing your taxes. Keep in mind that you often need to consider your circumstances for the following tax year.
Example of Split Year Treatment on Arrival
If you arrive in the UK on 1 July 2024 and qualify for split year treatment from that date, you will be taxed as a non-resident from 6 April 2024 to 30 June 2024, and as a UK resident from 1 July 2024 to 5 April 2025. As a non-resident, you’re not liable for tax on foreign income and gains received before 1 July 2024, except as specified by anti-avoidance rules.
If You’re Not Eligible for Split Year Treatment
If you are a tax resident but ineligible for split year treatment on arrival or departure, you may use double taxation agreements to your advantage. The UK has agreements with various countries that typically limit or exclude the UK’s ability to tax pre-arrival or post-departure income.
Split Year Treatment Around the World
Split year treatment is unique to the UK, but other countries have similar frameworks for partial year residency. For example, the US has rules for part-year residence if you move to or from the country, Canada recognises part-year residency, and France applies part-year residency rules.
Double taxation agreements also influence taxation, so always consult with an advisor for compliance and strategic planning.
Common Pitfalls
The complexity of split year treatment requires careful attention to avoid common pitfalls:
Timing: The date you arrive or leave the UK may not be the split year treatment date. The date is determined by law, sometimes differing from arrival or departure date.
Residency Rules and Eligibility: The rules involve many layers of conditions for both the year of relocation and following tax years. The SRT includes various tests to determine residency status, and the split year treatment only applies if you’re a resident in the UK for that particular year.
Record-Keeping and Compliance: Thorough records are crucial for compliance. Understand what constitutes a UK workday and the implications for day counting and tax residency.
The best way to avoid these pitfalls is by planning your residency carefully and seeking professional advice to navigate these complexities.
Laura Sant, Founder of LSR Partners and one of Daysium’s Founding Partners, agrees. As a result of the way that split year treatment works, you need to follow a prescriptive set of rules to obtain this treatment for each Case, and, as with the rest of the SRT, once you have broken the rules – for example, you’ve spent a day too many in the UK pre- or post-split – you cannot undo this,” she told Daysium.
She went on to highlight two examples showing the complexities of split year treatment. In the first example, Laura explains that if you moved into the UK in temporary accommodation and it took too long for you to find a home, you may end up spending too much time in the UK pre-split year treatment, leading to it being unavailable.
“Alternatively, if you intend to break UK tax residency by means of full time work overseas and your new job doesn’t work out, you might end up needing to pay UK tax on the full amount of your overseas employment income”, Laura explains.
Laura believes that “planning can play an important part in ensuring that you know what is needed to achieve split year treatment and also to have an understanding of your options in case the worst were to happen.”
The Importance of Accurate Day Counting for Split Year Treatment
Accurate day counting is essential for determining eligibility and compliance with split year treatment rules.
Day counting is necessary to:
Determine eligibility: The SRT relies heavily on day counting.
Establish the split date: Precise day counts determine the split date.
Calculate working days: Required for full-time work overseas cases.
Avoid unexpected residency triggers: The SRT considers day counts over multiple years.
Different cases have varying day count thresholds. Accurate day counts help you and your advisory team understand applicable rules for strategic planning and compliance.
Day Counting Tools: Manual vs. Automated
Optimising day counting and record-keeping is crucial for compliance with split year treatment rules and strategic planning. Choosing the right tools facilitates your compliance journey.
Automated day counting tools offer significant advantages over manual methods. These tools save time, enhance efficiency, and reduce the risk of errors by automatically logging days. They ensure a precise day count, supporting better compliance and strategic planning. Real-time updates allow for timely decision-making and improved planning.
Day Counting Method
Pros
Cons
Manual Day Counting Tools
🟢 Flexibility 🟢 Cost-effective
🔴 Time-consuming 🔴 High risk of errors 🔴 Lack of real-time updates
Automated Day Counting Tools
🟢 Efficiency and Time-Saving 🟢 Enhanced accuracy and reliability 🟢 Real-time information
🔴 Initial setup and cost 🔴 Dependence on technology
With an automated day counting software, you can streamline the process, ensure minimal friction and maximum security. In contrast, manual day counting tools like spreadsheets are time-consuming and prone to errors, increasing the risk of non-compliance.
Using Daysium for Accurate Day Counting for Split Year Purposes
Daysium simplifies day counting, a crucial element in managing UK split year tax rules. The platform automates the recording of days spent in and out of the UK, integrating tailored tax rulesets directly into its system. This assists you in complying with complex tax requirements.
When you use Daysium, the system automatically logs your location data and updates your day count based on the specific rules that apply to your situation, thus eliminating the need for manual tracking. This automated process ensures that your day counting is precise and aligned with your individual requirements.
For example, if you depart from the UK on 1 July at 11:20, Daysium records your departure time and location, and logs your arrival at your destination. Such detailed and timely records can prove invaluable, especially if your tax situation is reviewed or investigated.
As the scrutiny from HMRC intensifies, particularly for HNWIs, the risk of prolonged investigations grows. Efficient and accurate record-keeping, as facilitated by Daysium, can help mitigate these risks by providing reliable and timely data.
Laura Sant, a specialist in UK tax residency, emphasises the practical benefits of using Daysium for those managing split year treatment scenarios. She notes, “Once you set up your tax residency details in Daysium, the system actively monitors your UK day count, alerting you as you approach the limit.”
She further explains how the companion app aids in effortless evidence gathering: “Daysium automatically records your physical presence, removing the need to manually create travel logs. For example, it allows you to easily record evidence on a real time basis, such as a photo of you at the Eiffel Tower when your phone says you are there.”
Daysium also addresses specific situational needs: “If, for instance, your UK residence must remain unoccupied during the overseas part of your tax year to meet tax residency criteria, Daysium can help document that you haven’t visited your home during that period, using geolocation data.”
How to Strengthen Your Tax Compliance
Three key steps are vital for strengthening your tax compliance when dealing with the UK’s split year treatment:
Seek professional advice: Tax advisors specialising in UK tax law, such as Daysium Founding Partners, can help you navigate the complex rules.
Plan proactively: Consider split year treatment in your planning, whether moving to or from the UK.
Create contemporaneous records: Use technology for accurate day counts and supporting evidence.
By following these strategies, you can maintain compliance and strategically plan your tax affairs.
Conclusion
Ensuring compliance with UK split year treatment rules requires meticulous planning and precise record-keeping. Using automated day counting tools like Daysium can greatly enhance accuracy and efficiency in your tax strategy. By seeking professional advice and planning proactively, you can effectively navigate the complexities of tax residency and protect your financial interests.
