Download guide 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 authorising 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 actually only need to provide proof (a receipt) for the evening meal, for example.
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 traveling 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 fro 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 we have provided you with 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, the 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 direct 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.
