Subsistence is the cost of meals and necessary expenses during business travel. These costs must arise because an employee works away from their normal place of work. In other words, the expense must links directly to a qualifying business journey.
For instance, subsistence may include:
- Food and drink purchased during a business trip
- Parking changes or tolls
- Business-related phone calls
These costs must remain reasonable and necessary, as excessive personal spending will not qualify.
Additionally, everyday meals at home or a normal workplace do not qualify. HMRC also treats these as personal expenses because everyone needs to eat regardless of work.
Explaining HMRC EIM30240
HMRC EIM30240 sets out how employers can use benchmark scale rates. These rates allow employers to reimburse employee expenses without seeking prior HMRC approval.
Employers can then:
- Pay fixed allowances for meals
- Avoid detailed claims for every expense
- Streamline internal processes
- Keep payments free from tax and National Insurance
However, employers must follow the rules carefully. Otherwise, HMRC may treat payments as taxable income.
HMRC Benchmark Subsistence Rates
HMRC sets maximum tax-free rates based on journey length. Employers can pay up to these limits, although they may choose to pay less.
| 5 hours or more | £5 |
| 10 hours or more | £10 |
| 15 hours or more (and ongoing at 8pm) | £25 |
Additionally, a £10 late evening supplement applies if the journey continues after 8pm. This supplement covers extra costs linked to late working.
For example: A 10-hour journey that continues after 8pm may allow a total claim of £20.
While longer working days can increase the total allowance, all qualifying conditions must still apply.
Rules Employers Must Follow
Employers must apply several rules when using benchmark rates. These rules help maintain compliance and avoid tax issues.
- Employers can pay less than HMRC rates if they choose
- Employers must tax any amount above HMRC limits
- Employees cannot claim tax relief on any shortfall
- Employees cannot claim twice for the small meal
For example: If a hotel includes breakfast, the employee cannot also claim a meal allowance.
This rule prevents double claims. If an employer pays more than the approved rate, the excess becomes taxable.
What Counts as a Meal
A meal includes both food and drink. It takes its normal everyday meaning.
Therefore, a meal is any occasion where someone eats or drinks. However, the employee must actually spend money on that meal during the journey.
If no purchase takes place, no claim can be made.
Qualifying Conditions
Employers must ensure that all of the following conditions apply before paying subsistence rates:
- The journey must relate to work duties or a temporary workplace
- The journey must not form part of ordinary commuting
- The employee must be away for at least 5 or 10 hours
- The employee must spend money on a meal during the trip
Moreover, the employee should retain evidence of the expense. This can include receipts or bank transactions.
Since April 2019, employers do not need to check every receipt. However, they must confirm that qualifying travel took place. They must also ensure that no incorrect claims exist.
Late Working and Regular Travel Patterns
Employees may start early or finish late on a regular basis. In these situations, employers can still apply the 5-hour or 10-hour rate where appropriate.
For example: A worker who regularly travels early in the morning may still qualify. However, the journey must still meet all other conditions.
Incidental Overnight Expenses
Employees may incur small personal costs during overnight business travel. These costs sit outside normal subsistence claims.
This includes:
- Nuying newspapers
- Laundry costs
- Calling home
HMRC allows up to £5 per night for UK travel without reporting requirements.
This allowance covers minor personal expenses only. It does not cover accommodation or meals. Employers must treat accommodation costs separately.
Reporting Subsistence and Tax Treatment
In most cases, subsistence payments within HMRC rates remain tax-free. This creates a simple system for both employers and employees.
However, different situations may apply:
| Payments within rates | No tax or reporting required |
| Payments above rates | Taxable through payroll |
| Private travel | Always taxable |
Therefore, employers must correctly identify the type of travel. Business travel and private travel follow different rules.
If an employer reimburses more than necessary, the excess counts as earnings. As a result, PAYE and National Insurance will apply.
When Subsistence Does Not Apply
Subsistence rules do not apply in every situation and HMRC does not allow claims for the following cases:
- Meals eaten at home
- Meals during normal communting
- Food provided at events or training
- Meals included in travel tickets
- Client entertainment costs
Additionally, alcohol should not form part of a claim. HMRC may challenge such costs if included.
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This article is for general informational purposes only and does not constitute legal or financial advice. While we aim to keep our content up to date and accurate, UK tax laws and regulations are subject to change. Please speak to an accountant or tax professional for advice tailored to your individual circumstances. Pi Accountancy accepts no responsibility for any issues arising from reliance on the information provided.