arrow_back Employee travel - Per Diem or Actual expenses?

in Business Bookkeeping Accounting Expert
550 points

retagged by
0 votes
I have recently employed 2 new members of staff who I expect to travel at least once a week around the UK (and on occasion to Europe).

Do I have to pay a Per Diem rate set by HMRC or is it easier for them to just submit receipts and I reimburse them for the actual cost? If the first (Per diem) will this day rate differ if they are travelling outside of Europe?

1 Answer

1 vote

Per diem rates or scale rate payments are fixed amounts paid to an employee to cover business expenses. HMRC issues Benchmark Scale Rates (BSR) and Overseas Scale Rates (OSR).

According to the HMRC, BSR are the maximum amounts an employer can pay or reimburse, free of tax and National Insurance contributions (NCI), without reporting the payments to HMRC under this system.

Choosing to reimburse the actual cost: An employer may choose to pay less. However if a higher amount is paid, the excess is subject to tax and NCI.

So you can either pay the benchmark rates (note that HMRC will require evidence of the expense having incurred but not necessarily the receipts) or reimburse the actual expenditure (with the proper receipts). Usually actual reimbursements are done on occasion where the expenses exceed the benchmark rates.

Accounting Guru
10.8k points

Related questions

1 vote
1 answer
ACCA or CIMA - which will give me better qualification?I am currently working as a Management Accountant for a music company and have been offered the opportunity to study further via my company. I ...
asked Dec 12, 2019 in Studying accounting Mingram Accounting Expert
550 points
0 votes
1 answer
Fundraising Company – How to handle and process charity moneyHello, we are a limited company which raises money for charity by selling our products with a portion of the sale price going to charity. We ...

Welcome to Aligned Financials - a quality monitored UK Accounting and Bookkeeping Forum, where you can freely ask questions and receive in-depth answers from experts and other members of the community.

Whether you are a business owner, self-employed, an accounting practitioner or student of accounting, you will find a wealth of high-quality information here. Don't see answers to your specific question? Just post a new question and it will be answered by qualified accountants, typically within 24 hours.

If you are an accounting professional, register now and begin answering questions to start building up your reputation. All questions and answers are rated by the community so the better answers your provide, the more points you will gain - especially for answering popular questions.

Of course, there are also some other UK accounting forums on the Internet.