FreeAgent practicality - best way to record Per Diem allowances?

[kryten22uk]

I've just got FreeAgent, and have been spending the past few days uploading my data and getting to grips with it. I travel for work a lot, and have entered all my receipts/expenses ok, but wondering what the best way of allowing for the Per Diem £25 overnight allowance is on FreeAgent?

Note that I'm only talking about the allowance as per EIM30240, which my Ltd can reflect rather than individually accounting for meals receipts, not anything that is charged to client.

I had thought, either creating a new Expense category, called 'Overnight Per Diem', and then adding them that way. Alternatively, I could bypass the Expenses section altogether, and just allow for it by way of a 'Payment' explanation under the bank transactions (again using the new Overnight Per Diem category).

Anyone got suggestion of the best approach?
Ta

[malvolio]

ICBW but I thought Per Diems were personal money...

In which case, if they're paid through YourCo, a separate Payment category would be the best way. Ensure it's zero rated for VAT.

[northernladuk]

Have you asked your accountant how they would prefer you to account for it?

Something doesn't sound right with the £25 but there isn't enough detail so maybe worth passing that past the accountant as well if you haven't already done so.

Are you still keeping receipts to prove you've spent money on meals etc and does this money genuinely cover food rather than you just claiming it because you can even if there has been nothing bought?

[Lance]

It would be recorded as an expense under accommodation and meals.

Personally I wouldn't bother with scale rate payments and would claim with receipts and get the VAT back as well. That's also easier to justify during an investigation.

To claim £25 as a scale rate you're talking over 15 hours, which to me implies a hotel anyway. So unless you're eating at McDonald's and want to trouser the £20+ extra I don;t see any benefit. Especially as you can still claim the £5 overnight scale rate allowance.

But ask your accountant as I don't know any contractors who have done this except the dodgy ones, or the ones with a dispensation from HMRC. So it may well not work for directors.

[kryten22uk]

In answer to above questions, I do stay away all week in hotels, yes, so the full £25 scale rate is applicable. As I rack up about 200nights in hotels annually, I rarely eat in the hotel restaurants anymore (bad health choice), so unfortunately it does mean collecting different receipts rather than it all being on the one hotel bill. I was previously keeping every little receipt, but my accountant was the one who asked/suggested that I just submit the £25 allowance. So yes, I do have historic evidence that it is appropriate in abundance. I do actually spend the cash, so wouldnt be making a profit per-se, but it would be a huge administrative win. Especially, if I just record one line item in FreeAgent per week for say 5*£25, and give the dates in the notes.

[northernladuk]

, but it would be a huge administrative win. Especially, if I just record one line item in FreeAgent per week for say 5*£25, and give the dates in the notes.

It's hardly a huge administrative burden counting a few receipts at the end of the week and putting 5* meals as a one liner but there is something of a time saving I guess.

[kryten22uk]

I don;t see any benefit. Especially as you can still claim the £5 overnight scale rate allowance.

What is that one; couldnt find it on the HMRC EIM exemptions? Surely it is just the same principle as the meals scale rate allowance; you either claim the exact amounts, or you benefit from the pre-agreed set rate to minimise admin.

It would be recorded as an expense under accommodation and meals.

Thanks, I think I'll just go with that route, albeit ensuring its a new zero-VAT rated category.

[SuperLooper]

I presume this £25 is a completely different thing from the standard £10 per night personal expenses allowance? I'm not familiar with the £25 allowance.

[kryten22uk]

It's hardly a huge administrative burden counting a few receipts at the end of the week and putting 5* meals as a one liner but there is something of a time saving I guess.

Actually this has got me thinking. Seems like I might have been coming at this from the wrong angle.
To date I've uploaded a photo for every meal receipt I get, as I thought that was what I was meant to do. But having spoken to the accountant just now, they've said they don't need to see this; instead just having the physical receipts in a big pile in the office purely in case of an HMRC review. So might in actual fact, just go with the actual costs rolled into one expense item every so often. That gets my goal of reduced admin, without the problem of HMRC potentially kicking up fuss about the scale rates.

[kryten22uk]

I presume this £25 is a completely different thing from the standard £10 per night personal expenses allowance? I'm not familiar with the £25 allowance.

The £25 meals allowance is:
EIM30240 - Employment Income Manual - HMRC internal manual - GOV.UK

I do recall in the past, there was an other overnight allowance for incidentals (newspapers, phone calls, laundry etc) but cant find reference to that any more.