Worldwide Subsistence rates

**WordIsBond** · 12 February 2019, 15:44

OK, I got answers, in case anyone else is thinking about this. I was partly right and partly wrong. The scale rates are in local currencies (USD and EUR in my example), not pounds.

Read EIM30295, EIM05250, and EIM02710. You can claim both the scale rates and a flat rate for incidentals for nights spent away from home (£5 in the UK, £10 foreign).

So in my examples above it would be 345.50 USD plus £10 for one night for the first, and for the second, 395 USD plus 22.5 EUR plus £20 (two nights away from home). If you can find a way to stay and eat more efficiently than that then it makes sense to pay it yourself and get reimbursed. There are different rules if you don't stay in a hotel, though, or if your client buys your dinner.

You can typically get a decent hotel around Times Square for $100 or maybe $150 a night so these scale rates ($221.5 room rate) are pretty generous. If you are going to be doing a lot of foreign travel it probably makes sense to understand them and use them rather than having your company pay expenses.

**Chart Accountancy** · 13 February 2019, 16:36

Originally posted by WordIsBond View Post

OK, I got answers, in case anyone else is thinking about this. I was partly right and partly wrong. The scale rates are in local currencies (USD and EUR in my example), not pounds.

Read EIM30295, EIM05250, and EIM02710. You can claim both the scale rates and a flat rate for incidentals for nights spent away from home (£5 in the UK, £10 foreign).

So in my examples above it would be 345.50 USD plus £10 for one night for the first, and for the second, 395 USD plus 22.5 EUR plus £20 (two nights away from home). If you can find a way to stay and eat more efficiently than that then it makes sense to pay it yourself and get reimbursed. There are different rules if you don't stay in a hotel, though, or if your client buys your dinner.

You can typically get a decent hotel around Times Square for $100 or maybe $150 a night so these scale rates ($221.5 room rate) are pretty generous. If you are going to be doing a lot of foreign travel it probably makes sense to understand them and use them rather than having your company pay expenses.

In addition to the above, HMRC require employers to ensure that the subsistence expenses reimbursed at scale rates are not excessive and justified in terms of being actually incurred. HMRC do require employers using the scale rates to have a checking system in place. The HMRC guidance (as per the link below) reference that ‘Your employees aren’t allowed to check their own expenses, so someone else within your company needs to do this to make sure they’re legitimate. Tell your employees to keep proof of their expenses, for example receipts or bills, in case you need to check them.’

Therefore, if you would like to adopt the use of the benchmark rates, you need to have someone else within your company who can check your expenses against the benchmark rates to ensure the claims are not excessive. HMRC’s guidance also reference that the benchmark rates are the maximum tax and NICs free amounts that could be paid by employers who choose to use this system. An employer could pay less than this rate if it wants to do so.

If you rent an accommodation, restrictions to the scale rates apply: EIM05275 - Employment Income Manual - HMRC internal manual - GOV.UK

With effect from 6 April 2009, HMRC have removed the scale rate payments for expenses incurred while staying with a friend or relative. However, you can still claim for the actual costs incurred for meals and subsistence.

**WordIsBond** · 13 February 2019, 18:14

Originally posted by Chart Accountancy View Post

HMRC do require employers using the scale rates to have a checking system in place.

Generally true, for the next two months. After that, no.

Your clients should thank me.

**Chart Accountancy** · 17 February 2019, 23:09

Originally posted by WordIsBond View Post

Generally true, for the next two months. After that, no.

Your clients should thank me.

Even with the new rules which are to be introduced, you will still struggle to satisfy the qualifying criteria as the employer will need to ensure the employees are undertaking qualifying travel. If you are both the employer and the employee, you should really claim the actual expenses or continue to maintain a checking system to somehow support your claims. These new rules are directed at larger organisations where more than one employee travels regularly abroad so to reduce the administrative burden.

**WordIsBond** · 18 February 2019, 07:24

Originally posted by Chart Accountancy View Post

Even with the new rules which are to be introduced, you will still struggle to satisfy the qualifying criteria as the employer will need to ensure the employees are undertaking qualifying travel. If you are both the employer and the employee, you should really claim the actual expenses or continue to maintain a checking system to somehow support your claims. These new rules are directed at larger organisations where more than one employee travels regularly abroad so to reduce the administrative burden.

Do you really need anything more than an email to a client saying, 'I'll be in your offices in NY Wed afternoon and Thursday morning', and then the flight booking?

**Chart Accountancy** · 18 February 2019, 17:04

Originally posted by WordIsBond View Post

Do you really need anything more than an email to a client saying, 'I'll be in your offices in NY Wed afternoon and Thursday morning', and then the flight booking?

This should be fine as a supporting proof to confirm a qualifying business trip. It would just be in cases where you have nothing else to back it up as you are the employer approving the qualifying trip and the employee going on the trip. However, claiming the OSR would be mainly seen as appropriate if you have many trips during the year. If you only have the odd journeys, it would best to just claim the actual expenses, but nothing to stop you making claims using the fixed rates as long as this is not seen, in cases of enquiries, as the reason for claiming the fixed rates is to obtain a higher tax saving, as in a single director company it would be more difficult to argue that you are making the fixed rates claims to just reduce administrative burdens if you only have a few business trips during the year.

**WordIsBond** · 20 February 2019, 10:29

Originally posted by Chart Accountancy View Post

This should be fine as a supporting proof to confirm a qualifying business trip. It would just be in cases where you have nothing else to back it up as you are the employer approving the qualifying trip and the employee going on the trip. However, claiming the OSR would be mainly seen as appropriate if you have many trips during the year. If you only have the odd journeys, it would best to just claim the actual expenses, but nothing to stop you making claims using the fixed rates as long as this is not seen, in cases of enquiries, as the reason for claiming the fixed rates is to obtain a higher tax saving, as in a single director company it would be more difficult to argue that you are making the fixed rates claims to just reduce administrative burdens if you only have a few business trips during the year.

Well, for me personally, I have several employees and my co-director does the bookkeeping and reimburses me. Of course, she's also my wife....

But it sounds like you are saying this is a nice tax break for larger companies that isn't really available to smaller ones. Is there anything in the regulations or guidance that says it has to be "to reduce administrative burdens"? And how does one prove motive anyway?

Worldwide Subsistence rates