travel and subsistence tax free allowance

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Per Diem Lookup

Frequently asked questions, per diem

What is per diem?

How do I find the per diem rate for (city/county, state)?

What is the difference between non-standard areas (NSA) and standard CONUS locations?

How are the CONUS per diem rates set for NSAs?

How does GSA set boundary lines for where per diem rates apply?

How can a CONUS non-standard area (NSA) receive a special review?

How can I request the establishment of a new NSA?

What if a city is not listed on the CONUS Per Diem website?

Can hotels refuse to honor the per diem rate to federal government employees and federal government contractors?

Is the hotel’s GOV rate the same as the federal per diem rate?

Are lodging taxes included in the CONUS per diem rate?

Are taxes and gratuity (tips) included in the Meals and Incidental (M&IE) expense rate?

What is considered an incidental expense?

How often is a study conducted on the M&IE expense rates?

What is the M&IE reimbursement rate during the first and last travel day?

Can I combine the lodging and M&IE per diem rates ("mix and match") in order to get a nicer hotel room or spend more on meals?

Do I need to provide receipts?

What do I do if there are no hotels available at per diem?

Do I receive a meal reimbursement for day travel away from my regular duty station?

How much per diem can I pay a contractor?

How much can a trucker deduct for meals per day?

Per diem is an allowance for lodging, meals, and incidental expenses. The U.S. General Services Administration (GSA) establishes the per diem reimbursement rates that federal agencies use to reimburse their employees for subsistence expenses incurred while on official travel within the continental U.S. (CONUS), which includes the 48 contiguous states and the District of Columbia. The U.S. Department of Defense (DOD) establishes rates for travel in non-foreign areas outside of CONUS, which includes Alaska, Hawaii, and U.S. territories and possessions. The U.S. Department of State establishes rates for travel in foreign areas. For more information on rates established by DOD and the State Department visit travel.dod.mil and aoprals.state.gov .

Please visit www.gsa.gov/perdiem to find the rates. Click on a state on the map to view that state's rates or enter the location in the search box. Even though some cities are listed for your lookup convenience, not all cities can or will be listed. To look up the county a destination is located in, visit the Census Geocoder . If neither the city nor county you are looking for is listed on the GSA per diem rate page, then the standard CONUS rate applies.

Non-standard areas (NSAs) are frequently traveled by the federal community and are reviewed on an annual basis. Standard CONUS locations are less frequently traveled by the federal community and are not specifically listed on our website.

Per diem rates are set based upon contractor-provided average daily rate (ADR) data of local lodging properties. The properties must be fire-safe and have a FEMA ID number. The ADR is a travel industry metric that divides room sales rental revenue by the number of rooms sold. All rates are evaluated to ensure that they are fair and equitable in the GSA and Office of Management and Budget approval process. For more detailed information, visit the Factors Influencing Lodging Rates page.

5 U.S.C § 5702 gives the Administrator of the U.S. General Services Administration (GSA) the authority to establish the system of reimbursing Federal employees for the subsistence expenses (lodging, meals, and incidentals) of official travel. The law governs how GSA sets rates today, and allows the GSA Administrator to establish locality-based allowances for these expenses with a reporting requirement back to Congress. The law was established to protect Federal employees by fairly reimbursing them for travel expenses. In addition, if a Federal employee cannot find a room within the established per diem rates, the travel policy allows the agency to reimburse the actual hotel charges up to 300 percent of the established per diem rates.

The per diem program has several standards that it follows in its systematic structured per diem methodology. The first level is having a "standard rate" that applies to approximately 85 percent of counties in the continental United States.

It is GSA's policy that, if and when a Federal agency, on behalf of its employees, requests that the standard rate is not adequate in a specific area to cover costs of travel as intended by the law, GSA will study the locality to determine whether the locality under study should become a "non-standard area." If the study recommends a change, a change will be implemented as deemed appropriate. GSA has implemented a process to review and update both the standard and non-standard areas annually.

The standard "boundary line" for where non-standard areas apply is generally one county. This is the case for approximately 85 percent of the non-standard rates that GSA sets. However, in some cases, agencies have requested that the rate apply to an area larger than one county, such as a metropolitan area. In a very small number of cases, an agency can and has requested that a rate apply to just a city and not the entire county. In some rural areas, a rate sometimes applies to more than one county due to lack of an adequate data sample to set a rate otherwise.

GSA uses the Federal Information Processing Series (FIPS) code standard for its apply areas. While GSA often uses ZIP codes to select hotel data samples, the apply area is coded by a FIPS code, unless a Federal agency only wants the rate to apply to certain ZIP codes. These codes are managed by the American National Standards Institute (ANSI) to ensure uniform identification of geographic entities through all federal government agencies.

In order for GSA to conduct a "special" review of a non-standard area (NSA) during the current fiscal year, a Federal Agency Travel Manager or an equivalent individual in grade or title must submit a signed letter on agency letterhead or stationery stating that the present per diem rate is inadequate. The request should contain the following information:

The geographical areas you want us to study, especially ZIP codes.
The property names (including addresses, ZIP codes, and rates) where your federal travelers stay while on temporary duty travel and those properties (including addresses, ZIP codes, and rates) that will not honor the federal lodging per diem rate.
The number of times actual expenses were used and/or federal travelers had to use another lodging facility to stay within the maximum allowable lodging per diem rate, which resulted in additional transportation expenses (rental car, taxi) being incurred.

All valid requests postmarked no later than 12/31 will be eligible for this review. All valid requests received after 12/31, but before 4/1 will be evaluated during the following fiscal year's annual review cycle. After all the requirements are submitted, GSA will obtain updated data from our contractor to determine whether a per diem rate should be increased, decreased or remain unchanged. We will conduct no more than one "special" review for a particular NSA annually.

Letters should be sent to: General Services Administration, Office of Government-wide Policy, 1800 F St. NW., Washington, DC 20405. For more direct service, please also scan and email your request (a signed letter on agency letterhead must be attached) to [email protected] .

The procedure and the request deadline are the same as FAQ #6. However, requests received after 3/31 will not be included in the following fiscal year's annual review cycle because the annual review will have already begun.

If a city is not listed, check to ensure that the county within which it is located is also not listed. Visit the Census Geocoder to determine the county a destination is located in. If the city is not listed, but the county is, then the per diem rate is the rate for that entire county. If the city and the county are not listed, then that area receives the standard CONUS location rate.

Hotels are not required to honor the federal per diem rates. It is each property’s business decision whether or not to offer the rate. Hotels also may or may not choose to extend the rate to other individuals, such as government contractors.

Hotels sometimes offer a "GOV" rate, which might be different than the federal per diem rate. If it is higher, you need to receive approval for actual expense prior to travel in order to receive full reimbursement. It is the traveler’s responsibility to know the federal per diem reimbursement rates, and should not assume a GOV rate is the same as the federal per diem rate. See the FTR Chapter 301, Subpart D-Actual Expense and follow your agency's guidelines.

Lodging taxes are not included in the CONUS per diem rate. The Federal Travel Regulation 301-11.27 states that in CONUS, lodging taxes paid by the federal traveler are reimbursable as a miscellaneous travel expense limited to the taxes on reimbursable lodging costs. For foreign areas, lodging taxes have not been removed from the foreign per diem rates established by the Department of State. Separate claims for lodging taxes incurred in foreign areas not allowed. Some states and local governments may exempt federal travelers from the payment of taxes. For more information regarding tax exempt status, travelers should visit the State Tax Forms page.

Yes, the meals and incidental expense (M&IE) rate does include taxes and tips in the rate, so travelers will not be reimbursed separately for those items.

The Federal Travel Regulation Chapter 300, Part 300-3 , under Per Diem Allowance, describes incidental expenses as: Fees and tips given to porters, baggage carriers, hotel staff, and staff on ships.

An M&IE study has traditionally been conducted every three to five years. Based upon the recommendations of the Governmentwide Travel Advisory Committee, GSA began reviewing rates every three years starting with rates for FY 2016.

On the first and last travel day, Federal employees are only eligible for 75 percent of the total M&IE rate for their temporary duty travel location (not the official duty station location). For your convenience, the M&IE breakdown page has a table showing the calculated amount for the "First and Last Day of Travel."

For federal employees, the Federal Travel Regulation (FTR) does not make a provision for "mixing and matching" reimbursement rates. The lodging per diem rates are a maximum amount; the traveler only receives actual lodging costs up to that maximum rate. Therefore, there is no "extra" lodging per diem to add to the M&IE rate. Likewise, the M&IE per diem cannot be given up or transferred to lodging costs. See FTR 301-11.100 and 301-11.101 for more information.

For any official temporary travel destination, you must provide a receipt to substantiate your claimed travel expenses for lodging and receipts for any authorized expenses incurred costing over $75, or a reason acceptable to your agency explaining why you are unable to provide the necessary receipt (see Federal Travel Regulation 301-11.25 ).

You may ask your agency to authorize the actual expense allowance provision. The Federal Travel Regulation (FTR) 301-11.300 through 306 notes that if lodging is not available at your temporary duty location, your agency may authorize or approve the maximum per diem rate of up to 300% of per diem for the location where lodging is obtained. You should also ensure you have checked www.fedrooms.com to confirm there are no rooms available at per diem in the area where you need to travel.

According to the Federal Travel Regulation (FTR), travelers are entitled to 75% of the prescribed meals and incidental expenses for one day travel away from your official station if it is longer than 12 hours. Please see FTR 301-11.101 .

GSA establishes per diem rates and related policies for federal travelers on official travel only, and cannot address specific inquiries concerning the payment of contractors. If the contractor is on a federal contract, check with the contracting officer to see what is stated in their contract. Contractors should also check the travel regulations of their company.

GSA establishes per diem rates, along with its policies for federal employees on official travel only. Truck-related questions should be addressed either to the Department of Transportation ( www.dot.gov ) or the Internal Revenue Service ( www.irs.gov ).

PER DIEM LOOK-UP

1 choose a location.

Error, The Per Diem API is not responding. Please try again later.

No results could be found for the location you've entered.

Rates for Alaska, Hawaii, U.S. Territories and Possessions are set by the Department of Defense .

Rates for foreign countries are set by the State Department .

2 Choose a date

Rates are available between 10/1/2021 and 09/30/2024.

The End Date of your trip can not occur before the Start Date.

Traveler reimbursement is based on the location of the work activities and not the accommodations, unless lodging is not available at the work activity, then the agency may authorize the rate where lodging is obtained.

Unless otherwise specified, the per diem locality is defined as "all locations within, or entirely surrounded by, the corporate limits of the key city, including independent entities located within those boundaries."

Per diem localities with county definitions shall include "all locations within, or entirely surrounded by, the corporate limits of the key city as well as the boundaries of the listed counties, including independent entities located within the boundaries of the key city and the listed counties (unless otherwise listed separately)."

When a military installation or Government - related facility(whether or not specifically named) is located partially within more than one city or county boundary, the applicable per diem rate for the entire installation or facility is the higher of the rates which apply to the cities and / or counties, even though part(s) of such activities may be located outside the defined per diem locality.

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Allowances, Differentials, and Other Special Pay

Pay Differentials

Pay differentials you receive as financial incentives for employment abroad are taxable. Your employer should have included these differentials as wages on your Form W-2, Wage and Tax Statement.

Pay differentials are given for employment under adverse conditions (such as severe climate) or because the location of the employment is in a hazardous or isolated area that may be outside the United States. The area does not have to be a qualified hazardous duty area as discussed in Publication 3, Armed Forces’ Tax Guide .

Foreign Areas Allowances

Certain foreign areas allowances are tax free. Your employer should not have included the following allowances as wages on your Form W-2:

Certain repairs to a leased home,
Education of dependents in special situations,
Motor vehicle shipment,
Separate maintenance for dependents,
Temporary quarters,
Transportation for medical treatment,
Travel, moving, and storage.

Allowances received by foreign service employees for representation expenses are also tax free.

Cost-of-Living Allowances

If you are stationed outside the continental United States or in Alaska, your gross income does not include cost-of-living allowances granted by regulations approved by the President of the United States (other than amounts received under Title II of the Overseas Differentials and Allowances Act). Cost-of-living allowances are not included on your Form W-2.

Lodging Furnished to a Principal Representative of the United States

Lodging (including utilities) provided as an official residence to you as a principal representative of the United States stationed in a foreign country is not taxable. However, amounts paid by the U.S. Government for your usual household expenses are taxable. If amounts are withheld from your pay to cover these expenses, you cannot exclude or deduct those amounts from your income.

American Institute in Taiwan

If you are an employee of the American Institute in Taiwan, allowances you receive are exempt from U.S. tax if they are equivalent to tax-exempt allowances received by civilian employees of the U.S. Government.

Federal Reemployment Payments after Serving with an International Organization

If you are a federal employee who is reemployed by a federal agency after serving with an international organization, you must include in income any reemployment payments you receive.

Peace Corps

If you are a Peace Corps volunteer or volunteer leader, some allowances you receive are taxable and others are not.

The following allowances are taxable and must be included on your Form W-2 and reported on your return as wages:

Allowances paid to your spouse and minor children while you are training in the United States,
Living allowances designated by the Director of the Peace Corps as basic compensation. This is the part for personal items such as domestic help, laundry and clothing maintenance, entertainment and recreation, transportation, and other miscellaneous expenses,
Leave allowances,
Readjustment allowances or "termination payments."

The following allowances are generally nontaxable and should not be included on your Form W-2, whether paid by the U.S. government or the foreign country in which you are stationed:

Travel allowances and
Living allowances for housing, utilities, food, clothing, and household supplies.

References/Related Topics

U.S. Foreign Service Employees
U.S. Government Civilian Employees Stationed Abroad
U.S. Citizens and Resident Aliens Abroad
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The rules on travel and subsistence: a long and winding road

Employment tax.

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As our working patterns shift and more of us move to hybrid working, what impact will this have on claiming tax relief for travel and subsistence expenses?

What is the issue?

While travel and subsistence is an area of compliance that seems straightforward on the face of it, it can actually be extremely complex for employers to understand and get right.

What does it mean for me?

Key considerations include rules concerning permanent and temporary workplaces, ordinary commuting and working from home. Make sure your policies are clear on what travel and subsistence expenses employees can claim.

What can I take away?

With the move to widespread hybrid working, we expect to see HMRC increasing its focus on these types of travel and subsistence expenses.

The coronavirus pandemic has significantly changed the way we work. Homeworking has become the norm for many more employees who previously spent all or almost all of their time in offices. Millions of us are now working from home for two or three days each week and spending the rest of the working week in the office. Homeworking and hybrid working appear to be here to stay.

That all sounds familiar and straightforward but the nub of the problem is that, for travel and subsistence expenses, even though more employees work remotely and/or are much more mobile than they used to be, the current tax rules covering employee travel and subsistence have not changed substantively since April 1998.

It was widely hoped back in 2016, when the last review of the travel and subsistence rules took place, that some of the shortcomings in the rules might be addressed. But the fact they were not should come as no real surprise, as the 1998 amendment itself aimed to change rules that had dated back some 140 years.

While travel and subsistence is an area of compliance that seems straightforward on the face of it, it can actually be extremely complex for employers to understand and get right. It is no coincidence that HMRC has issued a guidance booklet with over 70 pages to help explain the rules, and that it focuses on travel and subsistence during its reviews of employer records.

In the past, HMRC has undertaken detailed reviews of situations where employees have a workplace at home but also another elsewhere (such as their employer’s headquarters) and the employer meets the cost of journeys between their home and the other workplace; or where the employer is paying travel and subsistence expenses for what they believe is a move covered under the ‘detached duty’ rules allowing for the amounts to be paid tax free. With the move to widespread hybrid working, we expect to see HMRC increasing its focus on these types of travel and subsistence expenses.

Within the current system, there are two main things to bear in mind relating to travel and subsistence.

The first (under the Income Tax (Earnings and Pensions) Act (ITEPA) 2003 s 337) is that tax relief is provided for ‘travel in the performance of the duties of the employment’. In other words, relief is given for travel that is an intrinsic part of an employee’s job and may include journeys between two workplaces. This rule is generally well understood by employers and often applied correctly in practice, but this could change going forward as more employees work from home and employers incorrectly conclude that their employees’ homes are workplaces for tax purposes.

However, it is in relation to the second rule (under ITEPA 2003 s 338) – which provides tax relief for necessary journeys to workplaces that employees must attend for work purposes, apart from those amounting to ‘ordinary commuting’ – that problems most often arise.

Key terms and considerations

The key terms and considerations needed to understand the rules are summarised below. Note that the rules for subsistence are similar to those for travel. If a business journey is allowable for tax purposes, the subsistence cost attributable to that journey generally is also allowable, unless there are issues around excessive expenditure, dual-purpose trips, and round sum or benchmark allowances.

Travel and subsistence expenses which attract tax relief and satisfy the exemption for paid or reimbursed expenses (ITEPA 2003 s 289A) do not need to be reported to HMRC.

Any travel expenses paid by the employer which do not attract tax relief, and which are not exempted by ITEPA 2003 s 289A, will (depending on the circumstances and subject to a PAYE Settlement Agreement being in place to cover such costs) either need to be:

reported and dealt with at the tax year-end on forms P11D and P11D(b);
reported and subjected to tax and Class 1 National Insurance Contributions (NIC) under PAYE at the time of payment; or
reported and dealt with at the tax year-end on forms P11D for tax purposes and subjected to Class 1 NIC under PAYE at the time of payment.

HMRC penalties for non-compliance can be costly. For example, if incorrect P11Ds are filed negligently, a penalty of up to £3,000 per form can be levied by HMRC (although normally only in the most serious cases).

It could also mean that employers are liable for any tax and NIC that has been underpaid, potentially on a grossed-up basis, plus late payment interest. This can get expensive and large settlements have been seen on HMRC compliance reviews covering travel and subsistence expenses, particularly for large businesses. Settlements are often in relation to homeworkers having another permanent workplace and being paid for their travel expenses between their homes and those permanent workplaces; and travel from home to places which are not considered to be a temporary workplace.

1. Permanent workplace

A ‘permanent workplace’ is considered to be somewhere that an employee works regularly to perform their duties of employment. In many instances, it can be clear whether or not somewhere is an employee’s permanent workplace and, therefore, whether a journey to it can be deemed ordinary commuting. It is also possible for an employee to have more than one permanent workplace at the same time.

Travel to or from a permanent workplace and an employee’s home is generally treated as private rather than business travel, and so tax relief is not due on any related costs that are paid or reimbursed by an individual’s employer.

Necessary travel which takes place between one permanent workplace and another while an employee performs their duties of employment during the working day is treated as business travel and attracts tax relief.

2. Temporary workplace

A ‘temporary workplace’ is somewhere the employee attends to perform a task of limited duration or for a temporary purpose. So even if they attend it regularly, it may still not be classed as a permanent workplace.

There is, however, a special rule which treats a workplace that would otherwise be a temporary workplace as a permanent workplace, where an employee spends or is likely to spend more than 40% of their working time at that workplace over a period that lasts or is likely to last more than 24 months (known as the ‘24 month/40% rule’).

Bear in mind that the 24 month/40% rule treats locations that would otherwise be ‘temporary workplaces’ as ‘permanent workplaces’. If the workplace is not temporary in the first place (as it does not meet the definition laid out in the Employment Income Manual at EIM32075), the workplace would already be treated as a permanent workplace.

Travel to or from a temporary workplace and an employee’s home is generally treated as business rather than private travel; and so tax relief is due on any related costs that are paid or reimbursed by an individual’s employer, unless it is substantially the same journey in which case no deduction is allowable (ITEPA 2003 s 338(2)). This is not often considered by employers and very few expenses policies ever have this covered.

Such distinctions can be confusing – and as highlighted above, this is one of the areas of travel and subsistence on which HMRC focuses its attention. Employers often fail to consider the task involved or the purpose for working at a given location, which is what the legislation requires.

The employee’s attendance is not in question; the issue is whether the task itself will be undertaken for a limited duration or whether it is performed for a temporary purpose. The trouble is that many employers fail to look too deeply at the matter and simply consider the ‘24 month/40%’ rule, without first considering whether the workplace is capable of being a temporary workplace.

HMRC may ask for contracts, diaries and job descriptions in order to determine whether the locations visited meet the definition of a ‘temporary workplace’. Covid-19 has also presented a particular issue in that HMRC’s view is that the clock remained ticking even when government gave instructions to work from home where possible, so many employers are likely to find the 24 month period has expired during the last few years while employees have been working from their homes.

It should also be remembered that the word ‘task’ is not defined in the legislation. As a result, the normal dictionary definition applies. Here a ‘task’ is something specific; for example, a piece of work, rather than a group of things to do, which is the nature of a job more generally.

3. Ordinary commuting

For most employees, ‘ordinary commuting’ is the journey they make most days between their home and permanent workplace. Travel and subsistence expenses would normally be taxable here if the costs of ordinary commuting were paid for or reimbursed by their employer, or if travel facilities were provided.

But for some staff, the situation is more complicated. For example, if the journey to a temporary location is broadly the same as an employee’s ordinary commute to their permanent workplace, tax relief would be denied on the basis that the journey is normally treated as private travel.

This rule applies generally if the journey is in the same direction or on the same route, and amounts to less than 10 miles extra each way than the normal commute. This area is rarely explained in most employers’ travel and expenses policies but is again something that HMRC is increasingly focusing its energy on, particularly in major towns and cities.

4. Working from home

A key consideration when moving to a homeworking arrangement is whether the employer will meet the cost of the employee’s travel between their home and the office when they do travel into the office. This is of particular relevance to hybrid working arrangements.

The tax and NIC treatment of employees’ travel expenses can be complex and is particularly difficult to apply practically to modern working practices, such as hybrid working.

HMRC recently updated its guidance covering employees who work from home (EIM01471) to cover hybrid working. It now includes ‘Travel in the performance of the duties: travel to and from home where it is a place of work’ at EIM32370. The clear challenge with hybrid working is that when employees do travel into the office, often the statutory conditions in ITEPA 2003 s 337 will not be met for home to be a workplace for tax purposes, and under ITEPA 2003 s 338 the office will remain a permanent workplace.

Employers must therefore be clear when agreeing hybrid or homeworking arrangements which travel and subsistence expenses can be paid tax and NIC free and which cannot. EIM32174 covers ‘Travel for necessary attendance: employees who work at home: a hybrid working: example’.

In rare cases, ITEPA 2003 s 337 may apply, allowing for tax relief between the home (as a workplace) and another permanent workplace, as covered in EIM32370. The problem with applying ITEPA 2003 s 337 to hybrid working is that in many cases the location of the home isn’t dictated by the requirements of the job. HMRC notes: ‘For most people, the place where they live is a matter of personal choice. So the expense of travelling from home to any other place is a consequence of that personal choice, not an objective requirement of their job.’ The relief in ITEPA 2003 s 337 is therefore unlikely to apply to the majority of homeworking and hybrid working arrangements. It is worth noting that HMRC’s guidance says:

‘Most employers provide all the facilities necessary for work to be carried out at their business premises. So where employees work at home, they usually do so because it is convenient rather than because the nature of the job actually requires them to carry out the duties of their employment there. However, where it is an objective requirement of an employee’s duties to carry out substantive duties at the home address, then his or her home is a workplace for tax purposes.’

ITEPA 2003 s 338 then needs to be considered. This allows tax relief for travel expenses for the necessary attendance at any place in the performance of the duties of employment. To determine whether tax relief is due under s 338 for journeys between an employee’s home and their employer’s business premises, we need to consider whether the employee is travelling to a permanent or temporary workplace (see definitions above).

HMRC often quotes the case of Kirkwood v Evans [2002] EWHC 30 when looking at a ‘working from home’ situation. It concluded that although Mr Evans went to the Leeds office for only one day a week, it was a permanent and continuing part of his duties to do so. The judgment dealt with the situation briefly in a single paragraph, also stating that Mr Evans had conceded that the Leeds office was not his temporary workplace, even though the General Commissioners had concluded it was. The judge justified this view by saying: ‘This attendance was both regular and was not for the purpose of performing a task of limited duration or for some other temporary purpose.’

Perhaps Mr Evans was ill-advised to admit that Leeds was a permanent workplace. It could be argued that he undertook certain specific tasks each time he went there that were of limited duration; namely, delivering work he had performed since his last visit, taking new work with him, and downloading information from a database. On the other hand, HMRC seemed to argue that the word ‘task’ refers to doing these things each week on a continual basis.

There are, of course, also other special rules to consider on top of the above that cover areas relating to international trips, area-based and depot-based employees together with emergency call-outs.

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Managing business travel expenses

Guide to hmrc subsistence allowance & expenses, what is a subsistence allowance, how do hmrc subsistence rates work.

The cost of food or drink must be incurred after the business trip has started
The trip must be beyond their usual commute and be done as part of official business
The journey must take the employee away from their normal place of work for 5 hours or more

Is meal allowance taxable?

a meal or beverage is not purchased
the meal does not constitute additional expenditure
the “staying with friends or relatives allowance” is claimed
meals have been taken at home
meals are provided during a training course, conference or similar activity
meals are provided on the train or plane and included in the ticket cost

What are the HMRC domestic subsistence allowance rates?

£5 for travel of 5 hours or more (£10 supplement if travel is ongoing at 8pm)
£10 for travel of 10 hours or more (£10 supplement if travel is ongoing at 8pm)
£25 for travel of 15 hours or more (and ongoing at 8pm)

Overnight accommodation rate UK

Meal allowance rates overseas, how does a business report subsistence allowance spend.

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Travel and Subsistence Expenses HMRC – All you Need to Know About It

What are travel and subsistence expenses.

Travel and subsistence expenses are incurred when an employee travels for business purposes from one place to another. It includes the cost of travelling, meals, accommodation, laundry, and other related expenditures .

Since subsistence is considered a cost associated with business-related travel, it falls under the same category.

As an employee, when you are travelling to another location as a part of your job, you are qualified for a certain amount for your travel and subsistence expenses depending on your working rank or designation.

However, before the actual travel begins, employees have to provide a list of expenses that can be possibly incurred during travel. These particular expenses are qualified for reimbursement if you are working for an organisation or a company.

However, If an employee spends over limits on travel and subsistence expenses, they have to pay that cost from their own pockets.

Being an employer, you are obliged to pay certain taxes and National Insurance NI contribution to HMRC on the travelling costs of the employees. That cost includes:

Travelling costs such as train tickets or flight tickets.
Reimbursement of travelling expenses.
Accommodation costs such as Hotel if the employer needs to stay overnight.
Food costs and other subsistence expenses such as parking charges, tolls, congestion charges and business phone calls

A Change in Subsistence Expenses

As of April 2019, HMRC no longer requires businesses to provide receipts for every cost incurred as part of a business journey. the employee will just need to prove that they’re on a business trip when the expenses were incurred. So, if an employee on a business trip eats three meals, they actually only need to provide proof (a receipt) for one of those meals.

However, things to keep in mind:

This doesn’t apply if you use specially-agreed custom allowance rates
It also doesn’t apply if you follow industry-agreed rates

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Unclaimable Travel and Subsistence Expenses

There are certain costs and expenses that are not under the category of travel and subsistence expenses and therefore, you cannot claim those expenses for reimbursement from your organisation.

Unclaimable expenses include

Daily Travelling Expense – the amount you spent on commuting from your home to the permanent workplace regardless of time and distance. However, If an employee has to travel some extra distance for the purpose of work, the cost spent on the distance can be claimable.

Personal Vehicles — if the employee has purchased a personal vehicle on loan or through capital allowance , both amount respectively doesn’t come under the travel and subsistence allowance and hence, is unclaimable.

As per HMRC, employees are entitled to tax-free reimbursements for their business travelling. The employee has both options; get paid by the employer tax-free or the employee themself can opt for tax relieves on any shortfall via their tax return.

Claimable Travel Expenses

Mileage Allowance

HMRC has allowed the usage of personal vehicles for work-related travelling on fixed amounts. These fixed amounts should be approved by the organisation first, and then can proceed with the claim. However, if the employee incurred over the fixed amount, they should pay the exceeding amount on their own. However, if the employer doesn’t pay the Approved and fixed allowance, the employee can claim the full amount spent on the travel.

VAT on Mileage Allowance: If your organisation is VAT registered and does not use flat rate VAT accounting, it can claim back the VAT on the fuel element of the mileage allowance.#

Workplaces

Temporary workplace.

the employee can claim the incurred cost spend at the temporary workplace. A temporary workplace is where the employee spends less than 40% of work time or has spent less than 2 years.

Permanent Workplaces

An employee cannot claim the daily expense of travelling from home to the permanent workplace. But there are some exceptions such as:

If you frequently travel from one place to another for work-related purposes such as meeting clients, you can claim the expenses spent on your travel. The important thing to keep in mind is that only those expenses would be qualified for a claim if your travel journey is different from usual travel to the workplace.
If you have to travel on an urgent basis; if there is an emergency call-out service, the employee can claim the expenses incurred for that emergency travel.

Extensive Travelling

Frequent travelling could be a part of the job. In such cases, the employee extensively travelling from one place to another have the right to claim the expenses incurred during his travel. However, the employer should make sure that the place where the employee is travelling, should not fall under the permanent workplace category.

Hotel and Subsistence Expenses

Any expenses incurred by the employee on accommodation, meals and drinks, sundry charges such as laundry etc are obliged for the tax to HMRC. The employee is accountable to HMRC in case there are any inaccurate expenses in the bills. Companies may choose to allow employees to go over the limits, but they’ll have to pay tax every time they do.

Scale Rates for Subsistence Expenses

HMRC has set the standard rates for subsistence payments known as “scale rates for subsistence expenses”. The employees, If claim their expenses as per these scale rates, their payments will be free from tax and National Insurance contributions.

Breakfast Rate

you can claim a tax-free breakfast price of up to £5. However, this tax-free rate is claimable only if you had breakfast before 6 am and leave your current accommodation place before the usual time.

Meal Rates:

you can be paid the price of one meal up to £5 if you are away from your place of stay and workplace for more than 5 hours.
Similarly, you can be paid the price of two meals up to £10 if you are away from your place of stay and workplace for more than 10 hours.
You can be paid the price of the evening meal up to £25 if you leave your workplace after 8 pm or later than the usual working hours.

Above mentioned Benchmark scale rates are only qualified for the following conditions:

the travel must be part of the employee’s job or to a temporary place of work.
the employee should be absent from their normal place of work or home for more than 5 hours or 10 hours.
the employee should have incurred a cost on a meal (food and drink) after starting the journey.

Travel and Subsistence Cost as an Employer:

An employer is obliged to pay certain taxes and National Insurance on the reimbursements they made to employees for their Travel and subsistence costs. It includes costs of Travel, reimbursing travel, accommodation, and cost of utilising Public transport. Also, subsistence costs such as meals, drinks and laundry charges. The employer should take care of all these costs and should accurately report to HMRC.

In case, your employees are using public transport, its costs include the following:

Seasonal Tickets

If directly provided to the employees:

As an employer If you provided your employee with a seasonal travelling ticket, you should report the cost of a ticket to HMRC via filing up the cost on the form P11D. ticket cost should also be included in the earnings of the employees and Class 1 National Insurance should be deducted via the employee’s payroll.

If reimbursement is paid for seasonal tickets:

If your employees purchase seasonal tickets on their own, as an employer, you have more than one option for reimbursement such as

you can cover the ticket costs by providing an additional allowance to the employee
You can increase the salary of the employee,

However, the cost of the seasonal ticket is counted as earnings, so the employee is responsible to pay taxes and class 1 national insurance through their payroll.

Loan for seasonal tickets

If an employee is provided with a loan by the employer for a season ticket, it should be considered as any other common loan and therefore, the employer has to pay national insurance and certain taxes on it. However, there are some interest-free loans such as beneficial loans etc.

Contribution to Providing Facilities to Employees

As an employer, if you are paying a certain amount for facilitating your employees, you are not obliged to report these amounts to HMRC and neither have to pay any tax or National Insurance contribution on it. For example, if you are contributing to financing a bus route to reduce the travel distance for your employees, you are under no obligation to pay any type of tax.

The complicated reimbursement process has made it difficult for employers and employees alike. Those who are employed through an intermediary body like an agency or umbrella company might spend quite some time on their business travel expenses while trying to figure out how much is eligible in subsistence costs (and what’s not).

Consequently, it’s important for small business owners and entrepreneurs to establish processes with specialised accountants so that they can file claims quickly when necessary. However, If you are in search of a Specialised Accountant, Clear House Accountants have a team of expert and professional chartered accountants with years of experience. The team at Clear House Accountants take care of all type of tax obligations, and National Insurance contribution.

Jibran Qureshi

Managing Director

+44 (0)207 117 2639

[email protected]

chacc.co.uk

Jibran Qureshi FCCA is the Managing Director of Clear House Accountants and has over 13 years of experience in practice across multiple industries. Jibran’s educational background includes a Master’s in Financial Strategy from Oxford University and an Executive MBA from Hult International Business Schoo l. His experience in Financial Strategy, Tax Planning, Operational Consultancy and Performance Reporting guide his cognizant approach to leading Clear House and its clients to the future. This dexterity led him to be Enterprise Nation’s Top 50 Advisors. Jibran recognised the need to manage the innovative disruptions sustainably early on and shaped Clear House Accountants not just to be compliance specialists but advisors who help build complex ecosystems around cloud accounting software, provide advice on funding support, help manage innovative tax schemes, set up and implement complex strategic plans, and much more. So, his clients can thrive, not just survive .

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Guide to business travel and subsistence expenses

Carrie Stokes

Disclaimer: This post was last updated on February 28, 2024 so is based on rates, allowances legislation in effect on this date.

When your employees travel away for business purposes, it can be costly, especially when accommodation and food are involved. If you choose to cover the cost of your employees’ business travel, then you will have specific tax and National Insurance obligations to adhere to. But did you know that as a business owner or self-employed individual, you can claim tax relief when covering these costs?

Travel and subsistence expenses are the costs associated with business-related journeys, such as transportation, meals, accommodation and other miscellaneous expenses. Effective management of business travel expenses is crucial to the overall financial success of your business.

Read our in-depth guide below to find out all you need to know about business travel expenses for you and your employees and what can be claimed as legitimate business expenses.

At Spotlight Accounting, we are helping you manage your own and your employees’ travel costs so you can stay as tax-efficient as possible. We’ll guide you through the business costs of work-related travel and how you can make tax deductions on these costs.

If you are looking for professional business and accounting support , then please get in touch with our experts today!

What is classified as a business travel expense?

Business travel expenses cover a range of costs incurred while you or your employees are away for business-related purposes. This means travelling from the regular place of work, such as the office, to another location, either a temporary workplace, to meet with clients or participate in business events.

These costs can include :

Certain travel expenses, such as train or plane tickets
Accommodation costs when an employee stays overnight
Food and drink
Other necessary costs directly related to business travel

Unfortunately, you cannot claim expenses for employees’ everyday trips to and from their permanent workplace, parking fines, or any non-business-related travel costs.

So, if your employees have recently taken a business trip or are due to take one soon, then remember that many of the costs involved can be deducted. Make sure you keep track of the receipts so that you and your accountant can easily claim expenses when filing your returns.

Does an employer have to pay employees’ travel expenses?

When it comes to business journeys and work-related travel, it is typically the responsibility of the employer to cover any relevant costs incurred. This can vary depending on the work arrangement and employee’s contract.

However, it is usually good practice for employers to arrange transport and accommodation or reimburse employees for business-related travel, as it ensures employees are paid for expenses that benefit the company.

Plus, if you do cover these costs, you are eligible for certain tax deductions, which, in turn, can reduce your taxable profits, and help you attract and retain talent.

In situations where an employer doesn’t cover an employee’s travel expenses, the employee may be able to claim tax relief instead, as long as they meet the specific criteria set by HMRC.

HMRC business travel expenses guidelines

If you are covering the cost of your employees’ business travel, you can claim tax relief on some of these expenses. However, you will need to keep a few things in mind when it comes to HMRC compliance.

Firstly, the travel and subsistence costs must be “wholly and exclusively” for business purposes to qualify. This means they need to contribute to running or developing the business.

Secondly, there are various ways in which you can choose to cover these costs. You can reimburse them for the entire cost of their travel and subsistence, so long as they provide receipts, or you can set a fixed amount they can spend during the business trip.

What if the business trip requires employees to stay away?

When employees are required to stay away for a night or more, they will require overnight accommodation, which is classed as a subsistence cost. As an employer, you can cover these costs and reclaim any tax and VAT on them when filing your returns.

What are subsistence expenses for employees travelling?

When travelling for business-related matters, as a business owner, self-employed individual or employee, you’ll often need to pay for things like food and accommodation to keep you comfortable on your trip. These daily living expenses are known as subsistence.

As an employer, you can cover these expenses for your employees. However, if you choose not to cover subsistence costs, tax-paying employees can claim tax relief instead.

HMRC has set out a handy benchmark for subsistence rates, detailing a fixed amount you can cover that is National Insurance and tax-free.

The UK travel expenses benchmark rates are as follows:

These rates are only in relation to subsistence payments and do not cover overnight accommodation, as HMRC have not yet set a benchmark rate for accommodation expenses.

If you choose to reimburse employees at a higher rate than that set out by HMRC, you may be required to pay PAYE tax and National Insurance on the additional cost.

How much can an employee claim for subsistence expenses?

While there is no limit to how much employees can spend on subsistence, as an employer with a growing business, it may be wise to set an upper limit on the amount they can claim.

It is also vital for employees to keep receipts of their travel costs to show proof that their claim is accurate.

How do you manage travel expenses

Managing travel expenses doesn’t have to be a daunting task. There are many things you can do to ensure you can cover any travel and subsistence costs an employee arranges while reducing the tax and National Insurance impact.

Here are some of our top tips for staying on top of your travel expenses:

Clearly outline your company’s travel policies
Use digital tools and accounting software to maintain records
Utilise corporate discounts when travelling
Ensure expense reports are accurate and on time
Stay informed on tax regulations

Get tax advice from Spotlight Accounting

At Spotlight Accounting, we are here to help you understand your company’s finances, guiding you to your full potential. We are a friendly team of chartered accountants dedicated to making our client’s businesses more profitable.

As a team of enthusiastic number-crunchers, strategic minds and tax experts , we’ll help you understand the intricacies of business travel expenses.

To find out more about how we can help you, please get in touch today !

Frequently asked questions about business travel and subsistence expenses

For more information about claiming expenses on business trips, take a look at some of our FAQs below.

What happens if I lose receipts for my business travel expenses?

As a business owner, you should be well aware of the importance of keeping receipts. Losing a receipt for business expenses when travelling can be frustrating, but you may still be able to claim back some of the costs if your employees can’t provide proof of their expenses.

Ask the employee to gather any supporting documents, such as bank statements and confirmation emails or contact the vendor to see if they can provide a copy of the receipt.

If you cover employees’ travel expenses at the benchmark subsistence rates set out by HMRC, then you may not need to provide a receipt to make a claim.

Is there VAT on travel expenses?

Most travel-related expenses do not include VAT, although some do. If your business is VAT registered, you can reclaim VAT on certain travel expenses, such as plane tickets and hotel accommodation.

What is a per diem expense UK?

Per diem rates or allowances are a fixed amount of money you can pay your employees to cover their subsistence expenses while on business-related trips. It can cover daily costs such as food and other necessary purchases.

As an employer, you can choose the per diem rates you give to employees that fit their travel demands. HMRC also provides benchmark scale rates which cover these costs. If you happen to exceed the benchmark set out by HMRC, then you may be required to pay tax and National Insurance contributions.

Carrie Stokes Chartered Accountant

I work with directors of limited companies in Shropshire , Staffordshire and the West Midlands giving them a clear and up to date financial picture of their business that they understand. Looking at the numbers, what they mean and how they can be improved to grow their business.

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Subsistence expenses: A guide to the rules

The government website sets out the essential requirements for complying with HMRC’s rules on subsistence expenses.

As an employer paying your employees’ travel costs, you have certain tax , National Insurance and reporting obligations . This includes costs for:

providing travel

reimbursing travel

accommodation, if your employee needs to stay away overnight

meals and other ‘subsistence expenses’ while travelling

Subsistence include meals and any other necessary costs of travelling, for example, parking charges, tolls, congestion charges or business phone calls.

Business travel

You must report your employees’ travel expenses to HMRC, unless they are exempt. You may have to deduct or pay tax and National Insurance on it.

Some business travel expenses are covered by exemptions. This means you will not have to include them in your end-of-year reports. If you do not have an exemption, you must report the cost on form P11D. You do not have to deduct or pay any tax or National Insurance.

If you reimburse your employee with more than the necessary costs of their business travel, the extra amount counts as earnings, so you must:

add it to your employee’s other earnings

deduct and pay PAYE tax and Class 1 National Insurance through payroll

If you’ve agreed with HMRC that this will be a scale rate payment, you will not need to report it.

Related: VAT on business entertainment explained

Private travel

All non-business travel is counted as private. This includes the journey between an employee’s home and permanent workplace.

If, you arrange the transport and pay for it, you must:

report the cost on form P11D

pay Class 1A National Insurance on the value of the benefit

If your employee arranges transport and you pay the supplier directly, you must:

add the cost of the transport to the employee’s other earnings and deduct and pay Class 1 National Insurance (but not PAYE tax) through payroll

If your employee arranges and pays for the transport, and you reimburse them, the money you pay them counts as earnings, so you must:

You’ll be exempt from reporting or paying anything if the cost is for:

a works bus service

an employee with a disability (but only in certain circumstances)

a taxi home after occasional and irregular late-night working

a taxi home if a car-sharing system is temporarily unavailable

bicycles or cycle safety equipment

travelling to work because public transport has been disrupted by industrial action.

Those are HMRC’s rules and guidelines as set out on the website. However, there are many circumstances that may affect your ability to claim an allowance or mean that you have to pay tax or National Insurance on the expenses.

In this guide, we set out our understanding of the rules and their interpretation. However, this is an area that can be complex and it may be important to take professional advice to ensure you comply with HMRC’s rules.

Qualifying business travel

To qualify for tax relief, expenses for business travel must be incurred wholly, exclusively and necessarily for your business. Two scenarios meet that definition:

Your employee travels from their regular place of work, generally your office, to another location to take part in a meeting or carry out essential duties.

Your employee travels from home to a temporary workplace for a limited period.

However, travel to the temporary workplace must involve a longer journey than the employee’s ‘regular commute’ from home to your office. Where the distance is 10 miles to either the main office or the temporary workplace, for example, no claim is possible.

Related: How to calculate R&D tax relief for SMEs

Employees working from home

The situation has become more complicated because of the dramatic rise in working from home following the pandemic. In many cases, employees may treat their home as the permanent place of work. In that case:

A journey to the office for a meeting may not count as essential business travel.

A journey to a temporary location for a specific business purpose would qualify as business travel.

Employees travelling as part of the job

Some jobs may involve regular travel from the office to other locations and claims need to be carefully considered.

A sales representative or service engineer, for example, will probably travel to other locations to carry out their work on a daily basis. They may be based at your office or work from home. HMRC describe this as ‘travelling on work’ rather than ‘travelling to work’ and allow claims because business travel is an integral part of the job.

The situation is different for someone who travels regularly to other locations, but not on a daily basis as an integral part of their job. An area manager, for example, may visit other branches of your business several days a week as well as spending time at the main office. The journey from home to the main office would not qualify as business travel, but any journey from home or the main office to another branch would qualify.

Employees working on multiple sites

An employee who has no permanent workplace, but works on a number of different sites, is classed by HMRC as a ‘site-based employee’. Examples include consultants, inspectors , construction workers or caretakers responsible for a number of different sites. You can reimburse employees and claim tax relief for business travel, provided the time spent at each site is less than two years.

Read More: New VAT Reverse Charge For Construction Sector

Employees on longer-term postings to other sites

If an employee has to work on another site for an extended period, the other site is regarded as a temporary workplace and travel to that site qualifies as business travel. Generally, qualifying travel covers a period up to 24 months at the temporary workplace. If the situation goes beyond 24 months, the employee must spend at least 40 percent of their time at the site to qualify.

Making a qualifying subsistence expenses payment

When you are satisfied that any business travel related expenditure incurred by an employee meets HMRC’s qualifying criteria, you can reimburse the employee and claim tax relief on the expenditure.

To simplify the process, HMRC publishes a set of ‘scale rate payments’ :

Breakfast rate (£5)

The rate may be paid when an employee leaves home earlier than usual and before 6am and incurs a cost on breakfast taken away from home after the qualifying journey has started. If an employee usually leaves before 6am the breakfast rate does not apply.

Late evening meal rate (£15)

The rate may be paid where the employee has to work later than usual, finishes work after 8pm having worked their normal day and has to buy a meal before the qualifying journey ends which they would usually have at home.

One meal (5-hour) rate £5)

The rate may be paid where the employee has been undertaking qualifying travel for a period of at least 5 hours and has incurred the cost of a meal.

Two meal (10-hour) rate (£10)

The rate may be paid where the employee has been undertaking qualifying travel for a period of at least 10 hours and has incurred the cost of a meal or meals.

Scale rate payments

To make scale rate payments, you must have an agreed arrangement with HMRC. The published rates are the maximum amount you can pay without tax implications. If you pay a higher rate, the whole of the payment may be subject to tax and National Insurance.

Your employees must actually incur the costs and should keep receipts to validate their claims.

Travel costs for journeys in an employee’s private vehicle can be reimbursed on a cost per mile basis. HMRC publishes Approved Mileage Allowance Payments which means there are no tax or National Insurance implications. The current rates for private cars are:

45 pence per mile for the first 10,000 qualifying miles

25 pence per mile for subsequent qualifying miles.

You can also reimburse employees for associated costs such as parking, hotel accommodation and telephone charges, as well as travel costs on public transport.

Support from Accounts and Legal

This is a brief outline of the rules on paying subsistence expenses. If you would like professional advice on any aspect of subsistence expenses, or would like confirmation that you are complying with HMRC’s rules, our team of experienced tax accountants will be glad to help.

To find out more, please contact us on 0207 043 4000 or [email protected] .

You can also get an instant online accountancy quote through clicking the link.

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Subsistence expenses

Introduction.

Subsistence is the amount incurred as a consequence of business travel. Typically it relates to accommodation and meal costs incurred. These amounts are allowed because they are associated with the necessary travel which is not to a permanent workplace. See the Travel expenses guidance note for more information of when travel expenses are allowable.

If an employee qualifies for tax relief for a travel expense, they should also qualify for relief for the cost incurred on subsistence associated with the travel. These rules are different from the general rule for deductibility of expenses, in that the subsistence expense does not need to be incurred ‘wholly and exclusively’. This is because, with any subsistence, there are likely to be elements of mixed or private purpose rather than a 100% business purpose, eg meals taken on a trip or overnight accommodation because the employee needs to eat and sleep.

As a result of the exemption for expenses that are either business expenses or the reimbursement

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Subsistence expenses: Do you know the rules?

Travel and subsistence expenses are an amount paid out to an employee, by their employer, to cover costs associated with official visits or business travel. These expenses typically include travel, food and drink and lodging, as well as other associated outlay.

Typically the employer will pay the actual amounts expensed by the employee. However, paying subsistence expenses under the flat rate scheme can often appeal to employers and employees alike. These are calculated based on HMRC approved flat-rate amounts and are tax-free.

Subsequently, employees know exactly how much they’ll be paid and employers need not worry about reimbursing the exact cost.

What are the rates for subsistence expenses?

HMRC set benchmark scale rates, which can be used to calculate subsistence payments that are to be made to employees. The rates, which represent the maximum amounts that can be paid tax-free, are as follows:

Minimum journey time = 5 hours / Maximum amount of meal allowance = £5

Minimum journey time = 10 hours / Maximum amount of meal allowance = £10

Minimum journey time = 15 hours (and ongoing at 8pm) / Maximum amount of meal allowance = £25

For these purposes, a meal is deemed to be the combination of food and drink. Where the £5 or £10 rate applies and the qualifying journey continues beyond 8pm, a supplementary rate of £10 can be paid tax-free.

This supplementary amount is expected to cover added and unavoidable expense incurred directly as a result of working late.

Employers can choose to pay out less than the advisory rates, should they deem this to be more appropriate. However, should an employer wish to pay an employee more than the advisory rates, they must first consult HMRC. They must also be able to prove that actual outlay exceeds the benchmark rates.

If a higher amount is paid without prior HMRC approval, the excess is liable to tax and National Insurance contributions.

What is deemed to be qualifying expenditure?

The benchmark rates must only be used to make tax-free subsistence payments, to employees, where all qualifying conditions are met. These conditions are as follows:

the travel is in the performance of the employee’s duties or to a temporary place of work on a journey that is not ‘ordinary commuting’ (i.e. the normal journey between home and work);
the employee is absent from their normal workplace, or home, for an uninterrupted period in excess of five hours or ten hours, as appropriate;
the employee has incurred costs on a meal (food and drink) after the journey has commenced and retained appropriate evidence of their expenditure.

A change to the ‘checking’ rules

Under current rules, employers are required to have a ‘checking’ procedure in place. In other words, the employer must be satisfied that the employee has incurred the outlay for which they are being reimbursed. This is typically done by checking receipts or credit card statements.

The system used by an employer will depend upon the size and nature of the business. Regardless, it should be adequate enough to ensure that expenditure meets the qualifying conditions, only includes allowable items and is not disproportionate.

From 6 April 2019, however, the requirement to implement a checking system will be no more. New legislation, announced at Autumn Budget 2017, will remove the requirement for employers to check evidence of amounts spent when making benchmark scale rate payments.

Instead, employers will only need to carry out checks to ensure that employees are undertaking qualifying travel, before making payment.

What about overseas travel?

Overseas Scale Rates (OSR) are amounts that employers can pay to employees who travel abroad on business. These can also be paid without deducting tax or National Insurance contributions and need not be reported to HMRC. The amounts cover accommodation and subsistence costs. However, they are dependent on the country and city the employee visits, as well as the duration of the visit.

For advice on anything we’ve discussed in this blog, please contact us today to speak to one of our experts.

7 things we think you should know as the ISA turns 20… →

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Business and industry

Business Income Manual

Bim47705 - specific deductions - travel and subsistence: expenditure on meals and accommodation.

S57A Income Tax (Trading and Other Income) Act 2005

This guidance applies for Income Tax only.

General rule

The cost of food and drink consumed, and accommodation used, by a trader is not in general an expense incurred wholly and exclusively for the purposes of the trade, since everyone must eat in order to live. Such costs are (either wholly or partly) normal costs of living incurred by all and not for the purposes of trading, see BIM37900 onwards.

Where such costs are disallowable they cannot be apportioned to allow extra costs incurred from the necessity of lunching away from home or the place of business. There is no identifiable part or proportion of the expense which is incurred wholly and exclusively for trade purposes.

Occasional journeys outside the normal pattern and itinerant trades

A deduction is, however, allowable for reasonable expenses on food and drink for consumption by the trader either at a place to which the trader travels in the course of the trade or while travelling in the course of the trade, if certain conditions are satisfied.

A deduction must be allowable for the cost of travelling to the place, or would be if the trader incurred any such costs, and either:

the trade is an itinerant trade at the time the expenses are incurred; or

the trader does not travel to the place more than occasionally in the course of the trade and either:

the travel concerned is not part of the trader’s normal pattern of travel in the course of the trade; or
the trader does not have such a normal pattern of travel.

Overnight subsistence and accommodation expenses

Where a business trip by a trader necessitates one or more nights away from home, the hotel accommodation and reasonable costs of overnight subsistence are deductible.

This does not extend to overnight accommodation and subsistence at the base of trade operations, even if there is a contractual requirement for the trader to reside in a particular place.

The reasonable costs of meals taken in conjunction with overnight accommodation are allowable, whether or not paid on the same bill.

The same treatment may be extended to traders who do not use hotels, for example, self-employed long distance lorry drivers who spend the night in their cabs rather than take overnight accommodation.

For more detail, see BIM37670 .

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Travel allowances

Explains the PAYG withholding implications on travel allowances.

Last updated 24 August 2021

Travel allowance is a payment made to an employee to cover accommodation, food, drink or incidental expenses they incur when they travel away from their home overnight in the course of their duties.

Allowances folded into your employee's salary or wages are taxed as salary and wages and tax has to be withheld, unless an exception applies.

You include the amount of the travel allowance in the allowance box on your employee's payment summary.

The exception applies if:

you expect your employee to spend all of the travel allowance you pay them on accommodation, food, drink or incidental expenses
you show the amount and nature of the travel allowance separately in your accounting records
the travel allowance is not for overseas accommodation
the amount of travel allowance you pay your employee is less than, or equal to the reasonable travel allowance rate.

If the exception applies, you:

don't withhold tax from the travel allowance you pay your employee
don't include the amount of the travel allowance in the allowance box on your employee's payment summary
only include the allowance on their payslip.

If the first two exception conditions are met but you pay your employee a travel allowance over the reasonable travel allowance rate, you're required to withhold tax from the amount that exceeds the reasonable travel allowance rate. You also need to include the total amount of the travel allowance in the allowance box on your employee's payment summary.

You are always required to withhold tax from a travel allowance for overseas accommodation and include the amount of the travel allowance in the allowance box on your employee's payment summary.

Check the relevant Single Touch Payroll (STP) employer reporting guidelines to see how to report these payments through STP:

STP Phase 1 employer reporting guidelines – allowances
STP Phase 2 employer reporting guidelines – allowances

Reasonable travel allowance rate

Each year we publish the amounts we consider reasonable for claims for domestic and overseas travel allowance expenses.

TD 2021/6 Income tax: what are the reasonable travel and overtime meal allowance expense amounts for the 2021–22 income year?
TD 2020/5 Income tax: what are the reasonable travel and overtime meal allowance expense amounts for the 2020–21 income year?
TR 2004/6 Income tax: substantiation exception for reasonable travel and overtime meal allowance expenses
Keeping travel expense records
Tax return – allowances
Tax return – work-related travel expenses

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Gachagua’s office seeks Sh2.6 billion for renovations in next financial year

Documents show that part of the money will go towards the refurbishment of his harambee annex office and his official karen residence..

Documents were presented before the Departmental Committee on Administration and Internal Affairs.

The office intends to use Sh460 million and Sh660 million to renovate the Harambee Annex and Karen residences respectively.

Deputy President Rigathi Gachagua's office is seeking Sh2.6 billion in the 2024-25 financial year.

Documents before the Departmental Committee on Administration and Internal Affairs show that part of the money will go towards the refurbishment of his Harambee Annex office and his official Karen residence.

The documents, presented to the committee for consideration of the 2024/25 Financial Year Estimates of Revenue and Expenditure and The 2023/24 Supplementary Estimates No. II, show Sh1.12 billion will be for refurbishment.

The remaining Sh1.48 billion comprises Sh200 million for the acquisition of motor vehicles, Sh250 million for the implementation of an alcohol drugs and substance abuse programme, Sh250 million for the purchase of medals, honours, and insignia and Sh800 million for confidential expenditure.

Making the submission, Patrick Mwangi, an official from the office said there was the need for the two offices to be refurbished as they are old.

“The continuous lack of maintenance has necessitated a facelift targeting major functional areas and security systems of the building,” he said.

Committee chair, Narok West MP Gabriel Tongoyo, wondered why Sh250 million was needed for the purchase of medals, honours and insignia.

“Are we not becoming extravagant when we know very well the situation of this country?” he posed.

Other expenditures include Sh247.7 million for catering services, accommodation, gifts, food and drinks, Sh301.5 million for boards, committees, conferences and seminars, Sh2 million for the purchase of staff uniforms and clothing trainees.

Sh17 million for International News Services, Sh205,000 entertainment allowance, Sh33.6 million for transport allowance, Sh205.5 million for house allowance, Sh22 million for overtime for civil service.

Sh5 million for domestic servant allowance, Sh328.5 million for personal allowance, Sh520,000 for gas, Sh31.4 million for telephone, facsimile and mobile phones and Sh10 million for internet connections.

Others are travel cost for both airline, bus, railway and mileage allowances (Sh171.8 million), accommodation for domestic travel (Sh91.7 million), sundry items such as airport tax, taxis (Sh5.7million), domestic travel and subsistence and other transportation costs (Sh343.6 million), travel cost by airlines, bus, railway (Sh163.8 million), accommodation (Sh93.8 million), state visits abroad (Sh15 million) and foreign travel and subsistence and other transportation costs (Sh287.6 million).

Budget cuts threatens operations at key Treasury agencies

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IMAGES

2020 BAS (Basic Allowance for Subsistence) Rates
FREE 9+ Sample Travel Allowance Forms in PDF
Travel and Subsistence Expenses HMRC
Travel and Subsistence Expenses HMRC
Travel Expenses and Subsistence Allowance Claim Doc Template
2019 Subsistence Allowance

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COMMENTS

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HMRC set benchmark scale rates, which can be used to calculate subsistence payments that are to be made to employees. The rates, which represent the maximum amounts that can be paid tax-free, are as follows: Minimum journey time = 5 hours / Maximum amount of meal allowance = £5. Minimum journey time = 10 hours / Maximum amount of meal ...
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The HMRC meal allowance rates are as follows: For travels lasting 5 hours or more: The maximum claimable meal allowance is £5. For durations of 10 hours or more: A £10 meal allowance is applicable. If away for 12 hours or more: You are entitled to a £15 meal allowance. For a full 24-hour period or longer: The meal allowance reaches a maximum ...
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As of April 7th, 2019 the official HMRC meal allowance rates for UK business travel are: £5 for travel of 5 hours or more. £10 for travel of 10 hours or more. £25 for travel of 15 hours or more, or if the travel is ongoing after 8pm. Many companies will have higher per diem rates for executives or just a more generous travel budget.
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Travel allowances
Travel allowance is a payment made to an employee to cover accommodation, food, drink or incidental expenses they incur when they travel away from their home overnight in the course of their duties. Allowances folded into your employee's salary or wages are taxed as salary and wages and tax has to be withheld, unless an exception applies. You ...
Gachagua's office seeking Sh2.6 billion in next financial year
Others are travel cost for both airline, bus, railway and mileage allowances (Sh171.8 million), accommodation for domestic travel (Sh91.7 million), sundry items such as airport tax, taxis (Sh5 ...