{"id":3614,"date":"2019-01-02T11:29:42","date_gmt":"2019-01-02T11:29:42","guid":{"rendered":"https:\/\/www.georgehay.co.uk\/blogs\/?p=3614"},"modified":"2023-11-15T20:27:18","modified_gmt":"2023-11-15T20:27:18","slug":"subsistence-expenses-know-rules","status":"publish","type":"post","link":"https:\/\/www.georgehay.co.uk\/blogs\/2019\/01\/subsistence-expenses-know-rules\/","title":{"rendered":"Subsistence expenses: Do you know the rules?"},"content":{"rendered":"<p><span style=\"color: #000000;\">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.<\/span><\/p>\n<p><span style=\"color: #000000;\"> 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. <\/span><span style=\"color: #000000;\">These are calculated based on HMRC approved flat-rate amounts and are tax-free.<\/span><\/p>\n<p><span style=\"color: #000000;\">Subsequently, employees know exactly how much they&#8217;ll be paid and employers need not worry about reimbursing the exact cost.<\/span><\/p>\n<h3><span style=\"color: #000000;\">What are the rates for subsistence expenses?<\/span><\/h3>\n<p><span style=\"color: #000000;\"> 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:<\/span><\/p>\n<p><em><span style=\"color: #000000;\">Minimum journey time = 5 hours \/ Maximum amount of meal allowance = \u00a35<\/span><\/em><\/p>\n<p><em><span style=\"color: #000000;\">Minimum journey time = 10 hours \/ Maximum amount of meal allowance = \u00a310<\/span><\/em><\/p>\n<p><em><span style=\"color: #000000;\">Minimum journey time = 15 hours (and ongoing at 8pm) \/ Maximum amount of meal allowance = \u00a325<\/span><\/em><\/p>\n<p><span style=\"color: #000000;\">For these purposes, a meal is deemed to be the combination of food and drink. Where the \u00a35 or \u00a310 rate applies and the qualifying journey continues beyond 8pm, a supplementary rate of \u00a310 can be paid tax-free.<\/span><\/p>\n<p><span style=\"color: #000000;\"> This supplementary amount is expected to cover added and unavoidable expense incurred directly as a result of working late.<\/span><\/p>\n<p><span style=\"color: #000000;\"> 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.<\/span><\/p>\n<p><span style=\"color: #000000;\"> If a higher amount is paid without prior HMRC approval, the excess is liable to tax and National Insurance contributions.<\/span><\/p>\n<h3><span style=\"color: #000000;\">What is deemed to be qualifying expenditure?<\/span><\/h3>\n<p><span style=\"color: #000000;\"> 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:<\/span><\/p>\n<ol>\n<li><span style=\"color: #000000;\">the travel is in the performance of the employee&#8217;s duties or to a temporary place of work on a journey that is not &#8216;ordinary commuting&#8217; (i.e. the normal journey between home and work);<\/span><\/li>\n<li><span style=\"color: #000000;\">the employee is absent from their normal workplace, or home, for an uninterrupted period in excess of five hours or ten hours, as appropriate;<\/span><\/li>\n<li><span style=\"color: #000000;\">the employee has incurred costs on a meal (food and drink) after the journey has commenced and retained appropriate evidence of their expenditure.<\/span><\/li>\n<\/ol>\n<h3><span style=\"color: #000000;\">A change to the \u2018checking\u2019 rules<\/span><\/h3>\n<p><span style=\"color: #000000;\"> Under current rules, employers are required to have a \u2018checking\u2019 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.<\/span><\/p>\n<p><span style=\"color: #000000;\"> 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.<\/span><\/p>\n<p><span style=\"color: #000000;\"> From 6 April 2019, however, the requirement to implement a checking system will be no more. <\/span><span style=\"color: #000000;\">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.<\/span><\/p>\n<p><span style=\"color: #000000;\"> Instead, employers will only need to carry out checks to ensure that employees are undertaking qualifying travel, before making payment.<\/span><\/p>\n<h3><span style=\"color: #000000;\">What about overseas travel?<\/span><\/h3>\n<p><span style=\"color: #000000;\"> 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.<\/span><\/p>\n<p><span style=\"color: #000000;\">For advice on anything we\u2019ve discussed in this blog, please <strong><span style=\"color: #ff6600;\"><a style=\"color: #ff6600;\" href=\"https:\/\/www.georgehay.co.uk\/contact-us\/\">contact us<\/a><\/span><\/strong> today to speak to one of our experts.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>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<\/p>\n","protected":false},"author":8,"featured_media":5896,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[240,3,200,7,5,90,177,125,81,239,394,82,73,8,70,15,79,9,230],"tags":[476,473,99,176,237,223,478,68,474,475,477,268,471,26,472],"class_list":["post-3614","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-academies","category-accounting","category-business","category-business-support","category-business-taxation","category-charities","category-employees","category-employers","category-hmrc","category-industry-sectors","category-legal","category-legislation","category-payroll","category-personal-taxation","category-property","category-richard-dilley","category-small-businesses","category-tax","category-team-member","tag-accommodation","tag-benchmark-scale-rates","tag-business","tag-employee","tag-employer","tag-expenses","tag-flat-rate","tag-hmrc","tag-overseas-scale-rates","tag-overseas-travel","tag-qualifying-expenditure","tag-rates","tag-subsistence","tag-tax","tag-travel"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Subsistence expenses: Do you know the rules? 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