Travelling, Vehicle Hire & Hotels: Codes 7400, 7401 & 7402

Travel away from base is a different kind of cost from running the business's own vehicles day to day — public transport, hired vehicles, and overnight stays all belong in their own dedicated codes.

The codes, and what each one holds

Code 7400 — Travelling covers general business travel costs such as train, air or taxi fares.

Code 7401 — Vehicle Hire records the cost of short-term hired vehicles for business trips, separate from the business's own owned or leased fleet.

Code 7402 — Hotels covers overnight accommodation costs while travelling on business. All three are Overheads codes and normally carry a debit balance.

Real-world examples across industries

National or international consultancy

A consultancy visiting client sites across the country relies heavily on rail travel — UK passenger transport is zero-rated for VAT, so even a substantial £340 rail fare carries no VAT at all: the full £340 is a debit to 7400 (Travelling) and a credit to 2100 (Creditors Control Account), with nothing posted to 2201 (Purchase Tax Control Account). Occasionally a hire car is needed for a client visit away from a station, and that runs into the restriction that applies to leasing any car with potential private use: only 50% of the VAT is recoverable, regardless of actual use, since HMRC's rule is based on availability for private use, not how the car was actually driven. A £360 hire invoice (£300 net, £60 VAT) is a debit of £330 to 7401 (Vehicle Hire) — the net cost plus the irrecoverable half of the VAT — a debit of £30 to 2201, and a credit of £360 to 2100. An overnight stay at the client's location, £480 (£400 net, £80 VAT), is fully recoverable in the normal way: debit £400 to 7402 (Hotels), debit £80 to 2201, credit £480 to 2100.

Removals or trades business

A local trade business rarely travels far, so 7400 sees the occasional taxi fare when a company vehicle is off the road rather than a regular pattern of rail journeys — most local taxi and minicab firms aren't VAT-registered, so, like the rail fare above, there's typically no VAT to reclaim: a £35 fare is a straightforward debit to 7400 and credit to 2100. Hiring an extra van for a busy period is far more common here: vans and other commercial vehicles carry no VAT restriction on hire, unlike the car hire example above, so a £360 hire invoice (£300 net, £60 VAT) is a debit of £300 to 7401, a debit of £60 to 2201, and a credit of £360 to 2100 — full input VAT recovery, the same as hiring any other business equipment. A hotel stay is rare, perhaps once a year for an industry trade show: £480 (£400 net, £80 VAT) posts exactly the same way as the consultancy's stay above, since the VAT treatment doesn't change with the type of business — only how often the code gets used.

Why this matters day to day

Tracking travel, hire and hotel costs separately makes it easy to see whether business trips are becoming more expensive because of transport, accommodation, or both — useful when setting a travel policy or comparing the cost of remote versus in-person client work. It's also straightforward expense-claim material, so keeping these codes clean makes reviewing employee expense claims much faster.