A guide to UK per-diem: HMRC meal allowance rates for 2022
Annual business travel costs are set to rise by $1.7 billion [£1.37 billion] globally in 2022. And while it’s great that the world has opened up once again, this sudden surge in business trips will mean a whole lot of extra expenses to track and account for.
Your people might love travelling for work, but they probably don’t love all of the paperwork and faff that comes with filing expense claims. Between public transport, accommodation and mileage costs, expense submissions can feel like a huge waste of time (and a bummer on what’s supposed to be a work perk).
Luckily, one aspect of the expenses process is made a whole lot easier through HMRC subsistence rates for 2022. This meal allowance works in conjunction with other expenses associated with business trips. It simplifies the need for expense claims, making life for your finance team and your employees while they’re on the move much easier.
Not familiar with how HMRC meal allowance works? Let us walk you through it.
What is a meal allowance?
Through the standard HMRC subsistence allowance, the government sets a rate for a blanket expense reimbursement for all employed people. This is the suggested amount that employees will be given, or reimbursed, for the food that they munch on working away from home.
It even goes as far as suggesting different rates for different locations, including international destinations and overnight rates.
Unfortunately, this type of payment is due to come to an end. However, businesses are allowed to backdate their claims for up to five years. So, if your company has been using a digital expense solution like Pleo, you can look back at your receipts and claim the full tax relief. Phew!
And good news for all your freelancers – self-employed people also have access to their own meal allowance rates through a separate HMRC scheme.
It’s important to note that your company doesn’t have to follow these guidelines – they actually don’t have to reimburse staff meals at all. But it’s a good way to thank employees who travel away from their regular workplace, whether it be to meet clients or attend conferences.
As well as a nice employee benefit, the meal allowance also has favourable tax perks for companies. But more on that later …
Why is the food allowance important?
The subsistence payment is important as it benefits both sides; the employee and the company.
It makes budgeting a whole lot easier, since set amounts have no variability. With events and meetings planned in advance, your finance team can create a budget around spending even while working from home (including travel and accommodation, too).
Plus, they can use this to inform their reporting in real-time. This way finance can avoid delays that are likely to have a knock-on effect to other accounting processes. It means your people can spend less time on the boring stuff, and more time figuring out how to grow and scale.
What’s more, the finance department doesn’t have to wait until after the trip to fill out monthly spending reports and determine profits, expenses and taxes. This step can be performed in advance since the meal allowance determines the exact cost.
For employees, the benefit means more choice. Pasta? Sushi? Kebab? The choices are endless!
Rounding things off, HMRC subsistence rates reduce the need to submit expense claims. This means less of that paperwork on both sides.
What are domestic scale rate payments?
Let’s get to the part you really want to know: the rates themselves.
When qualifying conditions are met, the food allowance that HMRC scale rates depend on the length of time an employee has travelled or the distance away from their regular workplace.
Here are HMRC daily subsistence allowance rates for work-related travel inside of the UK:
Minimum journey time
Maximum meal allowance
15 hours (or overnight)
When working after 8pm
When do HMRC per-diem rates apply?
As mentioned, there are a set of very specific conditions for the subsistence expense. In order to use HMRC approved subsistence rates, all of these conditions must be met:
- Travel should be for the purpose of work and is not just completing the everyday commute
- Your employees should be absent from the usual workplace (whether that’s an office, permanent client site or home) for a minimum of five hours
- The meal was bought and eaten after the journey began and the member of staff has kept appropriate evidence, such as a receipt
In order to receive the food allowance per day, UK employees must not be staying with friends or family when their work requires staying overnight. It used to be allowed to stay with friends or family and claim a meal, but this has not been possible since 2009.
For international travel, a different set of per-diem scale rates apply.
International meal allowance rates
HMRC subsistence allowance also applies to overseas travel for the purpose of work and is also available for backdating through expense reconciliation.
While the meal allowance for UK employees side is a blanket rate, separate countries have a different per-diem allowance. It’s important to remember that each location uses its local currency, so the rate in British pounds will fluctuate as exchange rates do.
Since a normal working day lasts over five hours but less than ten, here are some examples of the daily meal allowance in various countries:
- Sweden - £30
- Portugal - £21
- Korea - £41
- India - £22
- France - £20
For travel to the U.S., specific city rates apply per day, for example:
- Boston - £25
- Los Angeles - £22
- Miami - £22
- New York - £24
For the full list of international per-diem rates, visit GOV.UK.
What happens if you go over HMRC meal allowance rates for 2022?
It’s inevitable that on some occasions, the amount paid for a meal may exceed HMRC meal allowance rates for 2022. Perhaps your executives get a higher rate, or maybe there isn’t a great variety of restaurant price options in the destination, for example.
Unfortunately, the food allowance rate does have a cap, compared to other HMRC business benefits like the mileage allowance.
In this case, the company has two options; the first is to only reimburse the employee for the designated scale rate. This means that the employee is left to repay the excess. Not ideal.
The second option, is to allow a higher rate. That kind of defeats the point of the tax benefits through this scheme though, as if this is done without first agreeing on a bespoke scale rate with HMRC, the excess will be subjected to tax and national insurance.
Going forward, your employees may be incurring meal-related costs that are higher than the average rates put out by HMRC. For companies whose staff travel frequently, it can be worth getting in touch with Revenue and Customs directly to request a higher meal allowance per diem rate. Of course, they’ll ask for proof to ensure you have it ready.
HMRC conditions for non-taxable meal allowance
HMRC-approved subsistence rates are actually tax-free when the qualifying conditions are met. This means that the expenses incurred can be offset against revenue in order to bring down the overall company tax bill.
However, if your company policy is to limit the meal stipend to only a certain group of staff, for example, the tax exemption does not apply. The same goes if the meal is home-cooked, and not from a restaurant. Moreover, offering vouchers in exchange for money cannot be included as business expenses, and won’t lead to the same tax benefits.
Overnight rates are also separate from the meal allowance. So if your breakfast meal is included in the hotel stay, then it’s not eligible for reimbursement again through the subsistence rates.
How to report HMRC subsistence allowance
The subsistence expense should be reflected on expense reports, which are required by Revenue and Customs to process your taxes. Expense reports should be completed immediately after every trip.
At the end of the tax year, businesses have to submit a P11D form for each employee that received the subsistence allowance. This informs HMRC what benefit you’re claiming for each employee along with the amount and is not just focused on the subsistence expense.
The second form is a P11D(b), which helps calculate how much national insurance (class 1) your business owes on all of the benefits it has given to employees.
If you’re struggling to collate all the receipts and work out exactly how much each of your people received through HMRC meal allowance, know that many other businesses are in the same boat. But there are ways to make it easier.
With Pleo’s expense reimbursement software, everything sits in the app so that your people no longer have to endure the pain of manual expense claims. Then, when it comes to the end of the tax year, it can all be exported in a compliant way, to ensure real accountability.
Less paperwork. Less stress. And full bellies.
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