Jenny Strudwick
2 minutes length
Posted: 13th August 2018

Plans revealed to cut burden of checking expenses

Anything HMRC can do to help ease the administrative workload of a business will generally be viewed as a positive measure. So, the Finance Bill 2018-19 proposals to remove some of the burdens associated with expenses payments checking, published on 6 July 2018, will no doubt be welcomed by many employers.

Currently, no tax or NIC charges arise where an employer uses HMRC’s approved benchmark scale rates (BSR) to pay or reimburse employees’ qualifying expenses incurred when travelling for work. The BSRs are designed to cover modest meal allowances with which employers can reimburse their staff for food and drink costs. Current rates are as follows:

  • Travel time 5 hours or more – meal allowance of up to £5 (maximum total £5) and a maximum total of £15 if travel ongoing at 8pm
  • Travel time 10 hours or more – meal allowance of up to £10 (maximum total £10) and a maximum total of £20 if travel ongoing at 8pm
  • Travel time 15 hours or more and ongoing at 8pm – meal allowance of up to £10 (maximum total £25).

Of course, an employer may choose to pay less than the approved amounts, with no tax or NIC implications, but if a higher amount is paid, the excess will be subject to tax and NICs.

Employers can also use HMRC’s overseas scale rates (OCRs), which are designed to include an element for accommodation and subsistence, when employees undertake overseas business travel. The OCR amounts are published in HMRC guidance, and are not currently approved by statute. The ‘unofficial’ nature of this regime has created a feeling of uncertainty for some employers, and it is therefore HMRC’s intention to bring OCRs into legislation from April 2019.

For employers with many employees regularly undertaking business travel, the task of checking and maintaining expenses records is likely to be extremely burdensome. Therefore, in order reduce the administrative workload, Finance Bill 2018-19 contains provisions which will remove the requirement to operate a receipt checking regime for small set amounts under BSR from 6 April 2019. In addition, as OSR is brought into legislation, similar to BSR, there will be no requirement for employers to operate a system for checking employees’ expenditure but they will need to ensure the employees are undertaking qualifying travel.

These proposals will affect all employers who use BSR to pay or reimburse employees’ subsistence expenses. There is likely to be an ongoing administrative saving for businesses, who will surely welcome the removal of the need to check evidence of the amounts of expenses incurred by employees. Whilst bringing the OSR into legislation is expected to have a negligible impact on employers, it will formalise existing concessionary processes used by employers and provide welcome certainty in this area.