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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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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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.

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

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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Travel and subsistence expenses HMRC

What are travel and subsistence expenses.

Travel and Subsistence expenses refers to the expenses an employee incurs during his official visits or business travel, which includes expenses on travel, meals, hotels, sundry items like laundry and other miscellaneous expenses.

If you are working for an organization, your employer may refund or reimburse these costs to you on producing appropriate bills corresponding to each expense header.

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However, you, as an employee, are entitled for a certain amount based on your rank or designation and you should produce an itemized list of expenses incurred accordingly. In case the expenses under various headers are relatively higher than what your entitlement is, then you would end up paying the balance amount from your own pocket.

If you are an employer, you would need to pay travel costs to your employees and have to pay certain tax, national insurance and reporting obligations to Her Majesty’s Revenue & Customs (HMRC). Travel costs of your employees might cover the following:

• Travel costs depending on your mode of travel I.e. train tickets or flights tickets etc.
• Reimbursement of travel costs.
• Accommodation Costs, in case the employee has to stay overnight at some location.
• Meals and other subsistence expenses like parking charges, tolls, congestion charges etc.

However, you must keep in mind that any expenses that you claim must solely be a part of your business journey and as per HMRC’s definition of HMRC, a business journey is a journey which you take as a part of your job and it is not your daily usual commute to and from your home and workplace and it demands you to travel to different places as a part of your job.

What All You Cannot Claim Under Travel and Subsistence Expenses?

If your job description requires travelling from one place to another, you are entitled to claim the expenses which you have incurred during travelling, however there are certain costs or expenses which do not fall under travel and subsistence expenses and thus you cannot claim these costs from your employer, such as:

Your ordinary daily commute from your home to your permanent workplace, irrespective of number of hours you spend daily while travelling.

However, in case an employee has to go for a business meeting at client location which is 40 kms from his place of stay and his permanent workplace is at a distance of 10 kms from his place of stay. So, if the employee has to report to the office and then go for the meeting, then the entire 50 kms are claimable and not just the extra 40 miles.

• If you have purchased your personal vehicle and are paying certain loan on it - this expense will not come under Travel and Subsistence Expenses and thus you cannot claim for the same.
• Any capital allowance to buy a vehicle - This does not fall under travel and subsistence allowance and thus cannot be claimed.

The basic understanding of travel and subsistence expenses is quite simple, however their tax treatment is not so simple and as a matter of fact, they are a bit complicated. For a general and basic understanding, as per HMRC, employees are entitled for tax free reimbursements for a business journey, however, if you are an employer, you can choose to either pay the employee tax free or the employee can opt for tax-relief on any shortfall through their tax return.

Qualifying and Non-Qualifying Costs : While you apply for travel and subsistence allowance, there are certain costs which are claimable, also called as Qualifying Costs whereas there are certain costs which are non-claimable, also called as Non-Qualifying Costs.

Types of Qualifying Costs:

Mileage Allowance : Under this allowance, usage of private cars, vans or motorcycles for work is considered and HMRC has declared a fixed amount under this allowance which is considered as an approved payment and only this approved payment is claimable. However, if you have incurred over and above the approved payment, you have to pay the difference amount on your own and the balance amount will not come under tax rebate. However, in case your employer does not pay you the approved amount or your allowance is taxed; in that case you claim the entire amount, which you have spent on your travel.

VAT on Mileage Allowance: In case, your company 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 .

For Example,

If you have a car with a 1500cc petrol engine, the fuel portion of the mileage rate is 13p per mile (as at June 2016).13p per mile represents the VAT inclusive amount ie 120% (100% plus 20% VAT). So to work out the VAT included, you need to do the following:

13p / 120 * 20 = 2.2p. So you can claim 2.2p in VAT.

But beware, your company will need to show HMRC on request that it has enough VAT receipts to cover the claim.

So for example, if 1,000 miles is claimed in the VAT period, then you will have claimed £22 in VAT (2.2p x 1,000). The fuel receipts will therefore need to total £130 (the VAT inclusive amount - £22/20 *120).

• Temporary Workplace : A workplace is considered as a temporary workplace if you spend less than 40% of your work time there and have spent less than 24 months at the workplace. In case if it applies to you, you can claim the costs incurred at your temporary workplace from your employer.
• In case, if you have to undertake frequent journeys from your place of stay to a different place in order to meet clients or fulfilment of your job duties, you can claim the expenses incurred in the travel, provided the journey or travel is different from your daily journey from your place of stay to your workplace.
• If your job profile demands an emergency call out service, like in case of general practitioners, then you can claim the expenses incurred while doing so. For example: If you have to give certain urgent medical advice to your client over the phone while you prepare to leave for the work, you can claim the cost.
• Travelling is an integral part of your job : In case your job profile demands extensive travelling and if traveling to various locations is an integral part of your job profile, you can claim the expenses incurred while traveling. However, you have to ensure that the place where you travel more frequently should not fall under the category of your permanent workplace.

Hotels and Subsistence Expenses:

Any expenses you have incurred on accommodation, food, drinks and any sundry charges like laundry etc are tax deductible and HMRC might question your bills in case they find it inappropriate or exorbitant in nature. For example, if you have submitted a bill for dinner with a client at The Ivy Restaurant washed down with Crystal Champagne.

For a better understanding, HMRC has published a list of scale rates for subsistence payments to the employees and if claims are paid as per the published scale rate, the payment will be tax and National Insurance free. The published rate are as follows:

• Breakfast Rate : Up to £5 is a tax free claim against the breakfast, however, the point worth an attention here is that it is applicable and valid only if you had your breakfast before 6 am and you are leaving your place of stay much before than the normal usual hours.
• One Meal Rate : In case you are away from your place of stay and workplace for more than 5 hours, then you can be paid one meal rate up to £5.
• Two Meal Rate : In case you are away from your place of stay and workplace for more than 10 hours, then you can be paid two meal rate up to £10.
• Late Evening Meal Rate : In case you leave your work place after 8 pm i.e. much later than the normal usual finish hours.

Travel and Subsistence Cost as an Employer:

As an employer, you have to pay/reimburse your employees travelling and subsistence costs and in this case, you have certain tax, National Insurance and reporting obligations to follow and these includes cost for providing travel, reimbursing travel, accommodation in case your employees have to stay overnight away from their place of stay and subsistence costs like meals, laundry charges etc. And in case, your employees are using public transport, then as an employer in order to cover their public transport costs, you have, yet again, certain taxes, national insurance and reporting obligations to take care of.

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

Season tickets provided for the employees.

In this case, you, as an employer, must inform the HMRC about the costs of the season tickets by filling up the cost on the form P11D . The cost of season tickets need to be added to the full earnings of the employees and Class 1 National Insurance (not the PAYE Tax) should be deducted through the payroll.

Season tickets cost reimbursed to the employees.

In case, you are in an arrangement where your employees buy their own tickets and you reimburse its cost or you cover the cost of the season tickets either by an additional allowance or in form of increased salary. This is counted as an earnings so as an employer, you need to add the cost to the employees total earnings and then deduct the tax and Class 1 National Insurance through the payroll.

Loans made to employees to buy season tickets.

In case, you have given any loan to your employees to buy season tickets, it should be considered like any other loan given to the employees because as an employer, if you are providing loans to your employees or any of their close relatives, you have certain National Insurance and reporting obligations. However, there are certain loans like Beneficial Loans, which are interest free.

Contributions to subsidized or free public bus transport.

However, in case, as an employer if you are contributing towards a subsidised or free public bus transport, you neither have to report anything to the HMRC nor you have to pay any tax or National Insurance on these costs. For example, if you have contributed in financing a bus route in order to reduce the cost of travel for your employees from their place of stay to the workplace, you are under no obligation to pay any tax or national insurance number or to report anything to HMRC.

Changes to Travel and Subsistence Expenses:

It was in the summers of the year 2015 when HMRC declared its view on Employment Intermediaries and Tax Relief for Travel and Subsistence and the consultation was basically to understand who is eligible for travel and subsistence expenses and the target people were those who are employed through a third party or an intermediary such as an agency, umbrella company or limited company. However, the changes implemented post the consultation did not affect sole traders and employees and the new rules were applicable from 06th April2016.

Conclusion:

After new rules were applicable post 06th April 2016, claiming travel and subsistence expenses under HMRC has become more tedious, especially for those who are employed through an intermediary body like an agency, umbrella company or limited company. At times, you might spend quite a small amount on your business travel and subsistence expenses and given the complexities of the reimbursement process, you might be wondering if it’s even worthwhile to undergo such a tedious process. However, not every time your expense amount is going to be a small one and thus you need to put certain process in place so that your claims are well taken care of and they are filed and reimbursed well in time.

And as they say, it is always better to channelize your energy and focus towards something you are good at while allocate rest of the work to those who are good at it. So, when it comes to hiring an established accounting firm who has not only years of experience but also has a well read and experienced team of chartered accountants and professionals, first name which comes to the mind is DNS Accountants.

They, as an accounting organization, have years of experience in accounting field and with the help of their experienced team of chartered accountants and other professionals, they have been helping individuals ( sole traders) employers and employees in timely reimbursement of their travel and subsistence expenses cost and while they do so ,they ensure that all obligations toward tax, reporting to HMRC and National Insurance is timely taken care of.

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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: 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.

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Subsistence Allowances and Advances

To see older tax rates from 2014/5, see the Archive – Tax Rates webpage.

29 February 2024 – The Minister of Finance has approved the new table of rates per kilometre for motor vehicles in respect of the 2025 year of assessment, for purposes of Section 8(1) of the Income Tax Act No. 58 of 1962.

The Commissioner for SARS has determined the daily amount for expenditure in respect of meals and incidental costs in the Republic of South Africa and the daily amount for travel outside the Republic in respect of the 2025 year of assessment, for purposes of Section 8(1) of the Income Tax Act No. 58 of 1962.

The external guide and annexures have been updated:

• PAYE-GEN-01-G03 – Guide for Employers in respect of Allowances – External Guide
• PAYE-GEN-01-G03-A01 – Rate per Kilometre Schedule – External Annexure
• PAYE-GEN-01-G03-A02 – Subsistence Allowance Foreign Travel – External Annexure

21 February 2024 – See changes from last year:

​Where the recipient is obliged to spend at least one night away from his or her usual place of residence on business, and the accommodation to which that allowance or advance relates is in the Republic of South Africa, and the allowance or advance is granted to pay for:

• 2024 Foreign Subsistence Allowance – See the changes.
• 2023 Foreign Subsistence Allowance – No changes from 2020.
• 2022 Foreign Subsistence Allowance – No changes from 2020.
• 2021 Foreign Subsistence Allowance – No changes from last year.
• 2020 Foreign Subsistence Allowance

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Subsistence expenses

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Tá an chuid seo den suíomh idirlín ar fáil i mBéarla amháin i láthair na huaire.

Travel and subsistence

• Normal place of work
• Business journeys
• Reimbursement rates
• Civil service rates
• Emergency travel
• Site-based employees
• Voluntary work

You can pay your employees' expenses when they travel on business journeys. You can also pay subsistence if employees are working away from their normal place of work.

You can repay your employees when they use their private cars, motorcycles or bicycles for business purposes.

This section explains the types of travel that can qualify for these repayments.

You must report details of expenses paid for travel and subsistence to Revenue. For further information, please see  Enhanced reporting requirements .

Next: Normal place of work

Published: 09 February 2024 Please rate how useful this page was to you Print this page

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• Circular 16 2022: Motor travel rates Revised motor travel rates circular 16 2022
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• Part 05-02-10 Road Haulier Drivers (Employees), Subsistence Allowances
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Guide to HMRC subsistence allowance & expenses

Peter bussey.

In the UK, HM Revenue and Customs (HMRC) allows you to claim business expenses under the term “subsistence allowance.” But what is included in a subsistence allowance? What is not? And how can you claim it?

What is a subsistence allowance? Subsistence is defined as the act of sustaining yourself, particularly at a basic level. So in other words, the basic stuff you need to get through your day. For the purpose of business expenses, it’s also known as a per diem or meal allowance - the inexpensive costs that you need while out on the road; food, drink, that sort of stuff. These expenses matter because if they’re designated as a business cost, then businesses do not have to pay tax on them, and that means savings! You are also able to claim back any VAT spent on these. How does the HMRC subsistence allowance work? Fortunately, HMRC’s subsistence allowance guidelines account for more than just meals. It also includes parking charges, tolls, congestion charges, and (business-related) phone calls. HMRC sets conditions and standard rates which you can claim back any tax spent on these. When looking for this online you will see HMRC call this "scale rate payments". The main stipulations required to claim meal expenses are:

• Cost of food or drink must be incurred after the business trip has started
• The trip must not be their usual commute and be done as part of their job.
• The journey must take the employee away from their usual place of work for 5 hours or more.

As of April 2019, HMRC no longer requires businesses to provide receipts for every cost incurred as part of a business journey. This means a lot less paperwork for business owners and finance teams. Now businesses can claim a set amount for each day of travel and only need to demonstrate that an employee has incurred some kind of expense during their business trip. 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. What are the HMRC domestic subsistence allowance rates? HMRC updates the exact amounts that can be claimed as part of subsistence allowance every year, so make sure to check the official HMRC website to ensure that you have the latest up-to-date information. 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. However tax is due on the excess above those rates. If you or your employees are traveling a lot and regularly go over these amounts, then it’s a good idea to contact HMRC directly and negotiate an allowance specific to your business. HMRC provide technical information on scale of expenditure , including examples of acceptable claims. Important Note: The above rates are ONLY for travel within the UK, for business trips made outside the UK the rates differ. Overnight accommodation rate UK The rate is £34.90 from 1 January 2013.

• This allowance is payable by employers when drivers have to spend the night away from home and their permanent workplace (if any).
• The cost of meals is included in the overnight rate. Employers should not also pay or reimburse the cost of these meals on either an ‘actuals’ basis or using the benchmark rates.
• Where drivers have a sleeper cab 75% of the allowance may be paid. An HMRC approval notice must be applied for by the employer.
• The allowance is subject to the rules in sections 337 and 338 ITEPA 2003.
• This allowance is NOT available to self-employed individuals.

Employers can also agree their own scale rate paid with HMRC. Where the employer knows that the driver uses their sleeper cab, the amount paid free of tax should not exceed a reasonable reimbursement of:

• Evening meal and breakfast.
• Washing facilities.
• Upkeep of bedding in the cab.

How does a business report subsistence allowance spend? You do this in the same way you report all of your spending to HMRC. Usually, that means, at the end of the tax year a business submits a P11D form direct to HMRC, for each employee that was subject to expenses/per diem/ meal allowance. Good to keep in mind, you may also need to submit an additional form called P11D(b). It's important to have employees submit expense reports on a regular basis or after every trip for subsistence expenses. Given the wide definition applied to subsistence expenses, it is important to keep an eye out for false claims, exaggerated costs, or other cases of expense fraud.

Get in touch If you would like further information on these areas please contact one of the team.

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Payments received by U.S. Government civilian employees for working abroad, including pay differentials, are taxable. However, certain foreign areas allowances, cost of living allowances, and travel allowances are tax free.

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.

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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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2024 Guide to HMRC Mileage Rates for Businesses

Dealing with HMRC mileage rates can be tricky, but it doesn't have to be a headache.   

If you're looking for a simpler way to manage business travel expenses and stay on top of compliance , we've got some insights that can help.   

We'll be covering:

• What are the HMRC Mileage Rates?
• What is the HMRC Mileage Allowance?
• When Can Employees Claim Business Mileage from Home?
• What is Travel Allowance in the UK?
• What are HMRC Fuel Advisory Rates?
• HMRC Mileage Rates for Electric Cars
• Taxation of HMRC Mileage Rates
• How to Apply the HMRC Business Mileage Rates: A Guide for Employers
• Keeping a Mileage Log for HMRC Compliance

Let's make managing travel expenses easier together.  

What are the HMRC Mileage Rates?  

The HMRC sets specific mileage rates for individuals using their personal vehicles for business purposes. These rates are designed to simplify calculating travel expenses for employers and employees, ensuring fair compensation for business use of a personal car.  

Breakdown of HMRC Mileage Rates  

Cars & vans : For the first 10,000 miles in a tax year, the rate is 45 pence per mile. Once you exceed this threshold, the rate drops to 25 pence for each additional mile.  

Motorcycles : A consistent rate of 24 pence per mile applies, irrespective of the distance travelled within the tax year.  

Bicycles : Cyclists can claim 20 pence per mile for business miles travelled.  

The HMRC 10,000 Mile Threshold  

The initial 10,000 miles are considered to bear a higher cost, accounting for the vehicle's depreciation, maintenance, and running costs.  

The rate reduction beyond 10,000 miles acknowledges the supposed decrease in these costs as the vehicle ages and accumulates mileage.  

What do HMRC Mileage Rates Cover?   

The HMRC mileage rates are meticulously calculated to cover all expenses associated with using a personal vehicle for business purposes.  

This includes, but is not limited to:   

Maintenance  

Insurance costs  

The intention is to offer a straightforward, fair mechanism for employees to be reimbursed without having to detail every individual cost incurred.  

What is the HMRC Mileage Allowance?  

The HMRC mileage allowance is a rate set by HMRC that allows businesses in the UK to reimburse employees for the use of their personal vehicles for business purposes.   

The primary goal of the mileage allowance is to provide a tax-free threshold for mileage reimbursement, ensuring that employees are compensated for the business use of their vehicles without incurring additional tax liabilities.  

Tax Implications of Mileage Allowances for Employers & Employees  

The HMRC mileage allowance is designed with tax efficiency in mind.   

Reimbursements made at or below the HMRC-approved rates are not subject to tax or National Insurance contributions. This applies to both employers and employees, making it a tax-efficient way to handle business travel expenses .  

For Employers:  

Reimbursements within the HMRC rates do not incur additional tax liabilities.  

Payments above the HMRC rates must be reported, and the excess is subject to tax and National Insurance contributions.  

For Employees:  

Receiving mileage allowance at or below the HMRC rates does not affect taxable income.  

If reimbursements are below the HMRC rates, employees can claim Mileage Allowance Relief on their tax return for the difference.  

When Can Employees Claim Business Mileage from Home?  

The HMRC guidelines allow employees to claim mileage for travel from their home to a temporary workplace or for specific business journeys that aren't part of their regular commute.   

The key criteria for these claims under the HMRC mileage rates include:  

Temporary workplace visits : If you’re travelling to a location for a limited duration or for a temporary purpose, this can qualify as a claimable business journey.  

Distinct business journeys : Travelling from home directly to meet clients, attend business meetings at different locations, or carry out site visits are examples of claimable business mileage.  

Regular Commute vs Business Travel: The Difference  

Regular commute : This is travel between your home and your permanent place of work. These journeys are not claimable under HMRC mileage rates because they’re considered as non-business travel.  

Business travel : This encompasses any travel that is solely for business purposes, excluding your normal commute. It's these journeys that the HMRC mileage rates aim to cover, ensuring employees are reimbursed for the additional costs incurred.  

Claiming Your Business Mileage  

For employees looking to claim their business mileage , here's a simplified process:  

Document your journeys. Keep a detailed log of your business journeys, including dates, destinations, and miles travelled. Documentation is key to substantiating your claims.  

Calculate your mileage. Use the current HMRC mileage rates to calculate your total claim amount. Remember, the rates differ depending on the vehicle used and the number of business miles covered.  

Submit your claim. Provide your documented journey log and calculated mileage to your employer. Employers typically have a process in place for these reimbursements.  

For employers:  

Ensure clarity around what constitutes claimable business mileage and communicate this effectively to your team to streamline the reimbursement process.   

Offer support and guidance on how to log and claim business mileage. This will not only ensure compliance with HMRC guidelines but also foster a transparent and supportive work environment.  

What is Travel Allowance in the UK?  

Travel allowance encompasses a broader spectrum of work-related travel expenses than mileage allowance. While mileage allowance specifically covers the costs of using a personal vehicle for business purposes, travel allowance can include various other travel-related expenses.  

Travel Allowance vs Mileage Allowance: The Difference  

Mileage allowance : Directly related to the use of a personal vehicle for business journeys, calculated using the HMRC mileage rates. It's designed to cover vehicle-related costs such as fuel, maintenance, and depreciation.  

Travel allowance : Encompasses a wider range of employee travel expenses incurred due to business activities. This can include public transport fares, accommodation costs, and meals during business travel, in addition to mileage costs when using public or alternative modes of transport.  

Criteria for Claiming Travel Allowances  

To claim travel allowances effectively, understanding the criteria set by HMRC is essential. Claims must be for expenses wholly, exclusively, and necessarily incurred in the performance of the duties of employment.   

Key criteria include:  

Temporary work locations : Travel expenses to and from temporary work locations can qualify for travel allowance claims.  

Necessary overnight stays : Costs incurred during necessary overnight business trips, including accommodation and meals, are claimable.  

Public transport usage : Expenses related to business travel via public transport, including trains, buses, and taxis, fall under travel allowance.  

What is Included in the Travel Allowance UK?  

Transport costs : Train tickets, bus fares, taxi receipts, and airline tickets for business-related travel.  

Accommodation : Hotel or other lodging expenses when overnight stays are required for business purposes.  

Meals and subsistence : Reasonable costs for meals during business travel, subject to HMRC guidelines.  

Incidental expenses : Minor costs associated with business travel, such as internet charges at a hotel.  

Both employers and employees need to keep detailed records and receipts for all travel expenses claimed under the travel allowance.

This not only ensures compliance with HMRC regulations but also facilitates a smooth reimbursement process.  

What are HMRC Fuel Advisory Rates?  

HMRC Fuel Advisory Rates are guidelines set for the reimbursement of fuel expenses incurred during business travel in company cars and vans. These rates are designed to:  

Reimburse employees for business travel in their company vehicles.  

Allow employees to repay the cost of fuel used for private travel in company vehicles.  

It’s important to note that these rates should not be used in circumstances other than those specified above.  

How are Fuel Advisory Rates Calculated?  

The process of calculating these rates is both systematic and reflective of current market conditions.

Here’s how HMRC determines the advisory fuel rates:  

Quarterly reviews : HMRC reviews the rates quarterly, considering the latest fuel prices and vehicle efficiency data.  

Fuel prices : The latest prices for petrol, diesel, and LPG are obtained from reliable sources, including the Department for Energy Security and Net Zero and the Automobile Association.  

Vehicle efficiency : Average miles per gallon (MPG) figures are derived from manufacturer data and adjusted for annual sales to businesses. For LPG vehicles, the MPG used is 20% lower than for petrol due to lower energy density.  

Electric vehicles : The advisory rate for electric cars is calculated using electricity price data and car electrical consumption rates, ensuring a fair assessment of electric vehicle running costs.  

Note : You can calculate employee car and fuel benefits using HMRC’s calculator .  

Applying the HMRC Fuel Advisory Rates  

Employers can apply these rates in two key scenarios:  

Reimbursing employees : If the mileage rate paid to employees does not exceed the advisory fuel rates based on the engine size and fuel type of the company car, there’s no taxable profit or National Insurance contribution due.  

Employees repaying for private travel : Correct recording and repayment of private travel mileage at these rates or higher ensure there’s no fuel benefit charge.  

Key Points for Employers & Employees:  

Employers have the flexibility to use their own rates if their vehicles are more fuel-efficient or if the cost of business travel is higher than the guideline rates, provided they can justify the higher cost per mile.  

Employees must accurately record all private travel mileage and use the correct rate to calculate repayments for fuel used for private travel.  

HMRC Mileage Rates for Electric Cars  

Electric vehicles (EVs) offer a unique set of advantages and challenges when it comes to business travel. Recognising this, HMRC provides specific mileage rates for electric cars, distinct from those for petrol, diesel, or hybrid vehicles.   

These rates are designed to account for the cost of electricity used for business travel, rather than fuel consumption, offering a fair and equitable means of reimbursement for EV users.  

Impact of Electric Cars on Business Travel Expenses & Reimbursements  

The adoption of electric vehicles can significantly alter the landscape of corporate travel expenses :  

Cost-effectiveness : Generally, electric cars are cheaper to "fuel" compared to traditional petrol or diesel vehicles, potentially reducing overall travel expenses.  

Environmental benefits : Encouraging the use of EVs aligns with corporate sustainability goals , reducing the carbon footprint associated with business travel.  

Tax incentives : Utilising HMRC’s mileage rates for electric cars can also offer tax benefits, aligning financial incentives with eco-friendly practices.  

What is the HMRC Mileage Rate for Electric Cars?  

As of 1 March 2024, the HMRC mileage rate for fully electric cars is set at 9 pence per mile .   

This rate provides a simple way for businesses and employees to calculate reimbursements for business travel using electric vehicles, ensuring that drivers are compensated for the electricity cost of their journeys.  

Note : This rate is subject to periodic reviews by HMRC, reflecting changes in electricity costs and the evolving efficiency of electric vehicles. Make sure to stay updated with the latest rates to ensure compliance and maximise the benefits of integrating electric vehicles into your fleets.  

Taxation of HMRC Mileage Rates  

The HMRC mileage rates are designed to simplify the reimbursement process for business travel, providing a tax-efficient framework for compensating employees. But, are HMRC mileage rates taxable?   

The answer hinges on adherence to the prescribed rates and the purpose of the journeys:  

Non-taxable allowances : Mileage allowances paid at or below the HMRC-approved rates for business travel are not considered taxable income. These rates are calculated to cover the vehicle's operating costs, and reimbursements within these limits do not require tax payments from the employee.  

Excess payments : Should an employer choose to reimburse at a rate higher than the HMRC-specified mileage rates without justifying the increased expense, the excess amount could be subject to tax and National Insurance contributions as it is considered earnings.  

Employer Reporting Obligations  

Employers play a crucial role in ensuring the tax efficiency of mileage reimbursements:  

P11D forms : When providing mileage allowances, employers must report any amounts that exceed the approved HMRC mileage rates on the employee's P11D form . This form details benefits and expenses that have not been subject to PAYE tax.  

PAYE Settlement Agreements : In some cases, employers may opt to cover the tax on excess mileage payments through a PAYE Settlement Agreement (PSA) . This agreement allows the employer to make one annual payment to HMRC covering all taxes due on minor, irregular, or impracticable employee expenses or benefits, including mileage rate excesses.  

Are HMRC Mileage Rates Taxable?   

As long as mileage allowances do not exceed the prescribed rates for the actual business miles travelled, they remain tax-free.   

This approach incentivises the accurate recording and reporting of business travel, aligning employee reimbursements with actual travel costs without additional tax burdens.  

How to Apply the HMRC Business Mileage Rates: A Guide for Employers  

Understanding how to apply HMRC mileage rates correctly not only aligns with legal requirements but also supports fair and transparent compensation for employees using their personal vehicles for work .   

Step 1: Understand the Rates  

Familiarise yourself with the current HMRC mileage rates for cars, vans, motorcycles, and bicycles.

These rates are designed to cover the cost of using personal vehicles for business purposes, including fuel, maintenance, and wear and tear.  

Step 2: Establish a Policy  

Develop a clear corporate expense policy on business mileage that includes how and when mileage can be claimed, the documentation required for claims, and how the HMRC mileage rates will be applied within your organisation.  

Need help building your expense policy? Use our free expenses policy template .

Step 3: Educate Your Team  

Ensure that all employees understand the policy, the importance of accurate mileage tracking, and how to submit mileage claims.

Clear communication prevents misunderstandings and promotes compliance.  

Step 4: Implement Mileage Tracking  

Encourage employees to keep detailed logs of their business mileage.

Whether through manual logs or digital tools, accurate records are crucial for compliance and reimbursement.  

Step 5: Verify & Calculate Reimbursements  

Review submitted mileage logs for accuracy and calculate reimbursements using the HMRC mileage rates.

Ensure that claims are justified and fall within the guidelines provided by HMRC.  

Step 6: Process Reimbursements  

Timely process mileage expense claims, providing reimbursements through payroll or as a separate payment, according to your business practices.  

Keeping a Mileage Log for HMRC Compliance  

Let's break down why keeping a detailed mileage log is crucial and how digital tools can make this task simpler and more reliable:  

The Benefits of Keeping Detailed Mileage Logs  

Ensuring tax compliance : Precise mileage logs are your safeguard against tax issues. They serve as solid evidence that supports your travel expense claims according to HMRC mileage rates, ensuring you stay on the right side of tax laws.  

Guaranteeing correct reimbursements : For both individuals and businesses, accurate logs mean accurate reimbursements. No guesswork involved - every mile travelled for business is accounted for and compensated correctly.  

Preparedness for audits : Should HMRC inquire further into your travel claims, a comprehensive mileage log provides a clear, detailed account of your business journeys, proving that your claims are justified and compliant.  

How Technology Simplifies Mileage Tracking  

Gone are the days of pen and paper logs - technology offers a streamlined, error-minimising approach to mileage tracking .  

One standout solution is ExpenseIn , an expense management solution that embodies efficiency and compliance in mileage tracking.  

Why Choose ExpenseIn for Your Mileage Tracking Needs?  

Automated journey tracking : Utilise GPS technology to automatically record your trips' start and end points, ensuring every business mile is accurately captured without manual input.  

HMRC-compliant mileage logs : Generate logs that meet HMRC's strict requirements, detailing every aspect of your business travel, from dates and distances to the purpose of each journey.  

Ease of use and integration : With user-friendly interfaces and compatibility with various financial systems, tools like ExpenseIn make mileage logging accessible and straightforward, no matter where you are.  

Moving to a digital mileage log system is not just about compliance; it's about embracing a solution that offers clarity, convenience, and confidence in every mile you log for business.  

Ready to transform how you track mileage? Take the first step with ExpenseIn. Book a demo today and discover how our tool can simplify your mileage logging, ensure HMRC compliance, and save you time and money.  

Explore our faster, simpler and smarter approach to expense management.

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How much can you make in the military? US officers can earn up to a $220K salary plus some pretty generous benefits

• Base pay is the same across the military but can increase significantly as you move up the ranks.
• Military personnel can get other tax-free allowances for housing and meals.
• Other benefits include comprehensive healthcare, discounted education, and hefty signing bonuses.  

Military service is a form of government employment .

Like many other government jobs, it offers various benefits. But how much can you actually make in the military?

Military service can offer a solid base pay , especially as you rank up. But the full compensation package of active military personnel goes beyond annual salary.

BI talked to various branches in the Department of Defense, including the Navy, Marine Corps, Army, National Guard, and Air Force, as well as military personnel across these branches, to decode the often complex military compensation packages.

Officers can earn up to a $220k salary

All active duty military personnel adhere to the same pay scale and ranking system for base pay, regardless of which branch they serve in.

The basic pay scale is mainly split into two categories: enlisted members and officers. Enlisted members are ranked from E1-E9 and officers are ranked from O1-O10.

Some military members also receive special pay on top of their base pay if they hold a military specialty or qualification, or are based in a high-risk location. For example, an E5 nuclear specialist in the military receives an extra $150 a month. In the Space Force, specialty personnel get paid in increments of $75 to $450 per month, according to a spokesperson.

An enlisted service member with an E-1 ranking receives $2,017.20 per month in basic pay, according to the DoD 2024 basic pay table. Usually, E1-E4 members are living in the barracks so they have little to no expenses.

Service members receive a routine pay increase about every two years depending on their rank, but promotions can vary and it depends on evaluations, time spent in the military, and the specific branch. For example, if you're in the Navy, you may need to take exams to get promoted. To become an officer, you have to have a college degree.

A new officer's basic pay begins at about $3,826 per month, while a more senior officer with a 0-5 rank with 10 years of service will earn $9,153 per month. Although this rate is listed in the basic pay chart, it often takes 10 or more years to reach this rank.

An O-9 or O-10 officer can make up to about $18,491 per month, which comes out to about $221,900 per year. The earliest you can make that amount is after 20 years of service if you make it to the top ranking, which is difficult to achieve.

Paychecks also include tax-free allowances

Basic pay serves as the primary compensation for service members, but they also get several tax-free allowances on their paychecks.

Basic Allowance for Housing, or BAH, is one of the most common tax-free allowances. Service members start getting BAH when they reach E-5 or E-6, get married, or have kids. BAH rates are determined by the Department of Defense and are based on housing research and market analysis. They typically increase each year.

Service members receive amounts depending on their rank, number of dependents, and cost of living in their location. For example, an E-5 with dependents in San Diego receives $3,882 per month in BAH, according to Veteran.com .

Service members outside the US may also receive an additional overseas housing allowance to incentivize military members to serve internationally.

Related stories

Military personnel may also receive Basic Allowance for Subsistence, or BAS, which is meant to offset the cost of their meals. If they qualify, enlisted members get about $460 a month in BAS, according to the Department of Defense's Finance and Accounting Service.

There are various other allowances that depend on specific circumstances, like clothing allowances for uniforms or family separation allowances for service members who serve a tour of duty.

There can be big bonuses

The US military hands out signing bonuses as a recruiting tool to accelerate and fill certain gaps.

If offered, a typical enlistment bonus can range from $1,000 or $2,000, according to an Army spokesperson.

Some programs pay up to $50,000 for enlistment bonuses offered to those entering a key specialty like cyber military intelligence, according to an Army spokesperson.

The military also pays retention bonuses that target critical specialties. Some officers can receive as high as a $245,000 bonus over a 7-year contract. Bonus amounts are dependent on qualified officer types and when they sign the contract in their careers.

The dispersal of funds depends on the service designator program, a Navy spokesperson said. While some branches may give 50% upfront and disperse the rest over five years, others may disperse it evenly within the contract period.

The majority of the bonuses are taxable, with the exception of bonuses given to service members in a non-taxable zone, like Bahrain.

Common positions that receive bonuses include pilots, nuclear sailors, and service warfare officers, according to a Navy spokesperson.

Free education, free healthcare, and a pension

The military offers large education benefits with the Post-9/11 GI Bill, which helps service members and their families pay for some of — or in some cases all of — the costs for college, grad school, and other training programs.

If you meet the 36-month requirement, you can get full tuition paid at a public school or up to $27,120.05 at a private institution. You may also be eligible for a housing allowance, according to the US Department of Veteran Affairs. You can also get up to 90% of education costs covered if you've served under 36 months.

Service members also qualify for the Blended Retirement System after 20 years of service. The retirement plan offers a traditional pension, which includes roughly 40% of pre-retirement pay calculated by multiplying 2% by their years of service by their highest 36 months of basic pay.

The system also offers a Thrift Savings Plan, which is a government-run 401(k) account, similar to a civilian retirement plan. It allows members to invest their money with a 1% contribution after 60 days of service. The government will also match contributions up to 4% of basic pay starting the second year. TSP can be accessed even if you don't complete 20 years of service.

Active duty service members, their families, and retirees can also receive free medical and dental care through Tricare, the military health care program. With Tricare, military members have no premium charges for coverage and no out-of-pocket costs for medical care or prescriptions.

Service members who serve 40 years in the military qualify for a yearly pension with their full salary.

As a service member, you'll also be eligible for a number of other benefits like discounted commissary and exchange at grocery stores and department stores. The military also covers the cost of moving if you're deployed to a different location.

Do you work in the military and want to share your story? Email the author at [email protected].

Watch: A Citadel cadet breaks down the 8 uniforms he wears at the military academy

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Leave Travel Allowance: A tax-free travel benefit for salaried professional

Salaried employees can seek a tax exemption through lta for expenses accrued from two journeys within a block of four calendar years.

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First Published: Apr 18 2024 | 9:43 AM IST

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