EIM05250 - Employment income: scale rate expenses payments: accommodation and subsistence payments to employees travelling outside the UK: tables of overseas scale rates
Subsistence expenses are a common example of expenses which employers choose to pay or reimburse by means of a scale rate payment. EIM30200 contains guidance about the evidence HMRC may require in support of an application for an approval notice in respect of a scale rate subsistence payment for employees travelling within the UK.
The sampling technique described in that guidance is not usually appropriate for employees who travel outside the UK, because most employers will not have enough internationally mobile employees to enable them to undertake a meaningful sampling exercise.
HMRC has therefore agreed that employers may use the overseas scale rates when paying or reimbursing accommodation and subsistence expenses to employees whose duties require them to travel abroad, without the need for the employees to produce expenses receipts.
Employers will need to be satisfied, and retain evidence to demonstrate, that the employee was engaged in qualifying travel outside the UK in the performance of the duties of their employment on each occasion that a payment or reimbursement is made using the overseas scale rates.
Accommodation and subsistence payments at or below the published rates will not be liable for Income Tax or National Insurance contributions for employees who travel abroad:
- in the performance of their duties (see EIM32350 onwards)
- to a temporary workplace (see EIM32000 onwards)
In such cases, employers need not include payments at or below the published rates on forms P11D and need not apply for an approval notice or operate a checking system. If an employer decides to pay less than the published rates its employees are not automatically entitled to tax relief for the shortfall. They can only obtain relief under the employee travel rules (see EIM31800 onwards) for their actual, vouched expenses, less any amounts paid by their employer. By “vouched expenses” we mean expenses which are supported by receipts, or some other contemporaneous record of the amounts spent.
These tax/NICs free amounts are in addition to the incidental overnight expenses that employers may reimburse tax/NICs free under section 240 ITEPA 2003 and the corresponding NICs disregard (see EIM02710 and NIM06015).
Employers are not obliged to use the published rates. It is always open to an employer to pay or reimburse their employees’ actual, vouched expenses, or to negotiate a bespoke scale rate amount under the terms of an approval notice which they believe more accurately reflects their employees’ spending patterns. Employers wishing to negotiate such an amount must of course be able provide HMRC with evidence in support of their figures, and will need to operate a checking system to confirm that payments are only made on qualifying occasions where employees were in fact obliged to incur and pay expenses of this nature.
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