Tax position on travel costs?

[jon h]

One for the accountants, I guess… We send fitters on jobs occasionally which require them to stay away overnight. If we offer them, say £50 per night subsistence, so they get the money up front, and can either spend it all on food, accommodation etc etc, or buy a sandwich, sleep in the van and keep the cash, should they get taxed on this, and does it make any difference if they get it as a separate payment or as part of their wage packet at the end of the month.

Alternatively, if we gave them a cash “float” then set the same per night spending limit, requested receipts and settled up at the end of the trip, I assume that this would not be taxed. Am I correct?

Thanks in advance

Jon H

[Eric Mc]

They certainly SHOULD be taxed if you give them a cash handout which they may or may not spend on subsistence.
The Revenue's view is that any suprpluses made or retained by employees from "expenses" are "Income" for tax purposes and should be taxed accordingly.
These details are usually shown on the Form P11d.

If they are only paid EXACTLY the amount needed to cover the subsistence cost, then there should be no tax charge.

[jon h]

Thanks Eric, just as I suspected (but not how the recipients see it!)

Jon H

[japhilip]

Aren't there certain exceptions for specific industries though? For instance, lorry drivers are paid a fixed 'overnight' rate (less than £20 IIRC), to cover food expenses. (They'd be expected to sleep in the cab).

[thewave]

Eric Mc said:

They certainly SHOULD be taxed if you give them a cash handout which they may or may not spend on subsistence.
The Revenue's view is that any suprpluses made or retained by employees from "expenses" are "Income" for tax purposes and should be taxed accordingly.
These details are usually shown on the Form P11d.

If they are only paid EXACTLY the amount needed to cover the subsistence cost, then there should be no tax charge.

Yes they should declare, but there are per diem rates that apply to go against the subsistance costs paid on behalf of the employee. Not too sure what the rates are though?

[Eric Mc]

The rules on expense claims can be very complicated. As TW says, there are some daily rates (similar to the pence per mile mileage claims) which the Revenue allow an employer to pay an employee without the need

a) for it be be declared on a P11d

b) for the employee to be taxed.

I'm sure a search on the Revenue's websit will allow you to ferret out these "flat rate" amounts.

With these types of "flat rate expense" payments, it is important that the paperwork underlying them indicates under what scheme they are being paid.

[jon225]

HMRC really do not like round sum allowances and would seek to tax them as wages. They do indeed allow a 'scale rate' for lorry drivers which is something negotiated nationally by the RHA. However your average small business trying to negotiate one of these will have a devil of a job. I have experienced a definite hardening of HMRC's attitide to claims for round sums to be included in a dispensation.

[Gordon Brown]

Overnight allowance in the civil service used to be about £26 a night, plus they paid accomodation at cost. You could clsim the £26 as long as you had some receipt of having spent some of the £26 and I don't recall the tax man chasing me. The £26 was made up of about £12 for an evening, £8 for lunch, £3 for phone cals home/dry cleaning! and the rest for refreshments in the day.


I now claim what I spend and only if rceioted but did wondr if I could get away with paying myself with the £26 arrangement.