EIM05230 - Employment income: scale rate expenses: subsistence expenses: advisory benchmark scale rate payments
The guidance on this page applies for the tax years up to and including 2015 to 2016. For tax years 2016 to 2017 onwards, the benchmark scale rates have been revised and are now included within the exemption for amounts which would otherwise be deductible. See EIM30200 onwards.
HMRC has introduced a set of advisory benchmark scale rate payments. They were announced in Revenue & Customs Bulletin 24/09 that has now been deleted. The Bulletin made clear that all employers could apply to use the benchmark rates. An employer can opt to use the benchmark rates by ticking the appropriate box on form P11Dx or by stating their intention to use them in a dispensation letter. The request may be part of a new dispensation application or a revision of an existing dispensation.
If an employer applies to use the benchmark scale rates, they will not have to undertake a sampling exercise before the dispensation can be agreed and granted. Similarly, if an employer seeks a dispensation with scale rate payments that are lower than the benchmark rates, they will not have to undertake a sampling exercise.
The benchmark rates are the maximum tax and NICs free amounts that can be paid by employers who choose to use the system. An employer can pay less than this rate if it wants to do so. If a higher payment or expense reimbursement is made without agreeing a tailored scale rate with HMRC, the excess over the benchmark rate should be subject to tax and NICs.
Although it will no longer be necessary to undertake a sampling exercise in these circumstances, the guidance relating to dispensations (see EIM30050 onwards and ECH10035 onwards) will still apply. The employer will still need to satisfy the conditions; particularly the travel and subsistence rules at section 337 ITEPA 2003 (see EIM32350 onwards) and section 338 ITEPA 2003 (see EIM32000 onwards).
One man companies/Personal service companies
If a company applies to pay the benchmark rates to the controlling shareholder/director, you should consider carefully this guidance before agreeing to the request. You should not refuse the request simply because it is from a one man company or smaller employer.
Uprating benchmark scale rates
HMRC is committed to reviewing the rates annually and will consider revising them when there has been a change in the scale rate of plus or minus 10% based on the Consumer Price Index from when it was last revised.