Tax Free Expenses for Employees

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By Raza Samar

When an employee travels for business purposes, their employer can pay them tax and NI-free travel allowances at HMRC’s pre-set flat rates. These were introduced in 2008 to help reduce the red-tape and administrative work involved in declaring travel expenses reimbursed on P11D’s and self assessments.

The benchmark subsistence rates are:

  • £5 for breakfast if the business journey starts before 6am

  • £5 if the employee spends more than give hours away and buys one meal

  • £10 if the employee is out for more than ten hours and they buy two meals

  • £15 if they are out beyond 8pm and buy an evening meal

The maximum payment an employer can make per day is £25 and these rates have not been increased since they were introduced six years ago despite inflation running at around 3% per year.

An employer can also reimburse an employees’ mileage if they use their own vehicle for business travel. HMRC’s rates for mileage are 45p per mile for the first 10,000 miles, and 25p per mile thereafter.

Professional fees and subscriptions can also be reimbursed tax and NI-free if the employee has registered, obtained a licence or become a member of a professional organisation and HMRC have approved the organisation they are a member of.

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