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    • Managing business travel expenses

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    Guides
    Business travel expenses
    Subsistence allowance

    Guide to HMRC subsistence allowance & expenses

    In the UK, HM Revenue and Customs (HMRC) allows you to claim business expenses under the term “subsistence allowance.” But, what is included in a subsistence allowance? What is not? And how can finance managers claim it?
    Let's find out.

    What is a subsistence allowance?

    Subsistence allowance is the money given to employees to cover business expenses incurred as a result of performing their work duties. This includes meals and drinks, accommodation, car parking charges and more. Put simply, subsistence refers to the cost of sustaining an employee when they’re travelling for business.
    Admin professionals who manage business travel expenses, know that these subsistence rates can vary depending on the employee's seniority and location of travel. For example, accommodation allowances are higher for employees travelling to London than they are for those travelling to Leeds.
    These expenses can be written off as business costs, meaning they’re not liable for taxation or national insurance. You are also able to claim back any VAT spent on these.

    How do HMRC subsistence rates work?

    HMRC sets conditions and standard rates which you can claim back any tax spent on these. These standard rates enable businesses to give subsistence payments without constant authorisation and approval. When looking for this online, you will see HMRC call these "scale rate payments".
    The main stipulations required to claim meal expenses are:
    • The cost of food or drink must be incurred after the business trip has started
    • The trip must be beyond their usual commute and be done as part of official business
    • The journey must take the employee away from their normal place of work for 5 hours or more
    As of April 2019, HMRC no longer requires businesses to provide receipts for every cost incurred as part of a business journey. This means a lot less reimbursement paperwork for business owners, finance teams and claimants.
    Now businesses can claim a set amount for each day of travel and only need to demonstrate that an employee has incurred some kind of expense during their business trip. So, if an employee on a business trip eats three meals, they only need to provide proof (a receipt) for the evening meal, for example.
    Start saving money on business travel for your company today! Book a demo and we'll show you how.

    Is meal allowance taxable?

    In the UK, meal allowances are not taxable. This has been the case since 1998.
    Given the expenses meet the stipulations outlined in the previous section, businesses can deduct the allowances from their taxable revenue. This leaves less taxable incomes and reduces the amount paid to HMRC.
    These expenses cannot be claimed if:
    • a meal or beverage is not purchased
    • the meal does not constitute additional expenditure
    • the “staying with friends or relatives allowance” is claimed
    • meals have been taken at home
    • meals are provided during a training course, conference or similar activity
    • meals are provided on the train or plane and included in the ticket cost

    What are the HMRC domestic subsistence allowance rates?

    HMRC updates the exact amounts that can be claimed as part of subsistence allowance in the UK every year, so make sure to check the official HMRC rates to ensure that you have the latest up-to-date information. As of January, 2023 the official HMRC meal allowance rates for UK business travel are:
    • £5 for travel of 5 hours or more (£10 supplement if travel is ongoing at 8pm)
    • £10 for travel of 10 hours or more (£10 supplement if travel is ongoing at 8pm)
    • £25 for travel of 15 hours or more (and ongoing at 8pm)
    Many companies will have higher per diem rates for C-level executives, or just a more generous travel budget. However, if these rates are exceeded, tax is due on the excess.
    Need help with employees reporting expenses? Check out our expense form template.
    If you or your employees are travelling a lot and regularly go over these amounts, then it’s a good idea to contact HMRC directly and negotiate an allowance specific to your business. For technical information on scale of expenditure, visit the HMRC's online resource, where they provide examples of acceptable expense claims.
    What about mileage rates? How much can you claim for driving for business reasons? Good question, check out our Mileage Allowance UK article for the answer.
    Important Note: The above HMRC travel and subsistence rates are ONLY for travel within the UK. For business trips made outside the UK, the rates differ.

    Overnight accommodation rate UK

    The UK government has no agreed benchmark scale rates for overnight stay expenses, unlike its international rates below. If this working away from home allowance is a recurring cost for your business, you will need to establish an agreed rate with HMRC. See the HMRC page on bespoke agreements for more information.

    Meal allowance rates overseas

    For UK-based companies, HMRC has a full list of recommended allowance rates by country. Here are the meal allowance rates and room rates for some of the most common business destinations:
    United States: (USD)
    City
    5+hrs
    10+hrs
    24hrs
    Room rate
    Atlanta
    30.50
    75.00
    98.50
    127.00
    Boston
    32.00
    76.50
    97.50
    239.00
    Chicago
    34.50
    84.00
    112.50
    198.00
    Houston
    24.00
    66.50
    88.00
    113.50
    Los Angeles
    28.50
    72.00
    93.00
    193.00
    Miami
    28.00
    75.50
    98.50
    221.50
    New York City
    31.00
    76.50
    102.50
    216.00
    San Francisco
    21.00
    71.50
    99.50
    190.50
    Washington, D.C.
    30.50
    70.50
    91.50
    177.00
    Seattle
    24.50
    62.00
    81.00
    184.00
    Canada (CAD)
    City
    5+hrs
    10+hrs
    24hrs
    Room rate
    Ottawa
    47.00
    124.00
    156.50
    212.00
    Toronto
    46.00
    118.00
    151.50
    181.00
    Vancouver
    38.50
    84.50
    114.50
    224.00
    France (EUR)
    City
    5+hrs
    10+hrs
    24hrs
    Room rate
    Lyon
    28.00
    73.00
    79.50
    122.00
    Marseille
    28.50
    86.00
    92.50
    190.50
    Paris
    40.00
    86.50
    117.00
    199.50
    Strasbourg
    24.00
    59.50
    80.50
    108..00
    Germany (EUR)
    City
    5+hrs
    10+hrs
    24hrs
    Room rate
    Berlin
    22.00
    65.50
    72.00
    167.50
    Munich
    29.00
    73.00
    79.50
    147.00
    Spain (EUR)
    City
    5+hrs
    10+hrs
    24hrs
    Room rate
    Barcelona
    28.00
    76.00
    101.50
    176.00
    Madrid
    32.00
    86.00
    114.50
    172.50
    Italy (EUR)
    City
    5+hrs
    10+hrs
    24hrs
    Room rate
    Milan
    34.00
    84.50
    96.50
    230.00
    Rome
    35.50
    81.50
    90.00
    170.00
    Poland (PLN)
    City
    5+hrs
    10+hrs
    24hrs
    Room rate
    Warsaw
    154
    372.50
    393.00
    115 (EUR)
    India (INR)
    City
    5+hrs
    10+hrs
    24hrs
    Room rate
    Bangalore
    1685.50
    3746
    4629.50
    16809.50
    Hyderabad
    1868.50
    4187
    5070.50
    13926
    Mumbai
    2186
    4567.50
    5108
    14,888.50
    New Delhi
    2,334
    5,572
    6,100.50
    13,926
    China (CNY)
    City
    5+hrs
    10+hrs
    24hrs
    Room rate
    Beijing
    232.00
    563.00
    605.50
    1344.50
    Shanghai
    232.00
    563.00
    605.50
    1,328.50
    Guangzhou
    232.00
    563.00
    605.50
    818.50
    Singapore (SGD)
    City
    5+hrs
    10+hrs
    24hrs
    Room rate
    Singapore
    91.50
    206.50
    218.00
    318.00
    Hong Kong (HKD)
    City
    5+hrs
    10+hrs
    24hrs
    Room rate
    Hong Kong
    292.50
    761.50
    816.50
    2,376.50
    In addition, HMRC provides excellent examples of how to use its published scale rates for business use overseas to reimburse employees and report on spend.

    How does a business report subsistence allowance spend?

    You do this in the same way you report all of your spending to HMRC. Usually, that means at the end of the tax year a business submits a P11D form, directly to HMRC, for each employee that was subject to expenses/per diem/meal allowance. You may also need to submit an additional form called P11D(b).
    A full guide to expense and benefits reporting can be found on HMRC's website.
    It's important to have employees submit expense reports on a regular basis or after every trip for subsistence expenses. Given the wide definition applied to these expenses, it is important to keep an eye out for false claims, exaggerated vs actual costs or other cases of expense fraud.
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