Subsistence allowance

[RJ5AF]

OK where is it? HMRC site doesn't have it in plain english.
Q. Is there a maximum Subsistence allowance when working away from my ltd company home office, from home, all week?

[northernladuk]

Send us your requirements doc and we will do your coding for you as well

Jeez
Use the search option
Use the google option
Think hard about posting basic question

[Moscow Mule]

You can expense everything (that is allowable) or you can claim scale rates.

You can't do both.

Search HMRC webtulipe for scales rates for more info...

[RJ5AF]

Yes always expense everything within 5 years. But the scale mechanism has been overhauled and a defined claim scale in now in place. (But not on the HMRC site) Hmmm

[LisaContractorUmbrella]

EIM05200 - Employment income: scale rate expenses payments: general
Section 62 ITEPA 2003
Many employers pay or reimburse, at scale rates, expenses incurred by employees in performing their duties. Subsistence payments are a common example.

A scale rate payment which is calculated to do no more than reimburse the expenditure incurred by employees on allowable expenses will not be regarded as a round sum allowance ( EIM05100). The employer can be authorised to make such payments without deduction of tax under PAYE. See Booklet 490, Section 9.6 onwards.

With effect from 6 April 2009, employers can opt to use the advisory benchmark scale rates for subsistence expenses that have been set by HMRC (see EIM05230). They can do so by ticking the appropriate box on form P11Dx or by making a request in writing. Where an employer applies to use the benchmark scale rates as part of a new or updated dispensation request, they will not have to undertake a sampling exercise (see EIM05210)

It is important that you only apply scale rate payments to appropriate items. In general, scale rates are only appropriate for expenses which are widely incurred, in broadly similar amounts, but for which it is often difficult to get receipts. For example subsistence, or the expenses of cleaning uniforms or protective clothing (see EIM32465). Scale rates should be set at a fairly modest level which, taking one day with another, will be enough to cover the relevant expenses. They should not be pitched at a level to cover the highest amount that an employee might spend.

The employer should have procedures in place to ensure that:



Scale rate payments are only paid when the employee has incurred an allowable expense. A scale rate payment which is paid irrespective of whether the employee has incurred an allowable expense is simply a payment of earnings within Section 62 ITEPA 2003 (see EIM05100).
Scale rate payments are not paid to employees whose circumstances have changed and have ceased to qualify. This may be, for example, because the workplace is no longer temporary by reference to Sections 338 & S339 ITEPA 2003 (see EIM32100 onwards) or because their duties have changed and they no longer travel in the performance of the duties or to a temporary workplace.

HTH

[RJ5AF]

thanks for that. Appreciated. Yes was also deciphering the same page.

[LisaContractorUmbrella]

thanks for that. Appreciated. Yes was also deciphering the same page.

Basically it is as with any other expense - a scale rate, which is a pre-determined amount - can be paid as long as the expense has been incurred. Scale rates were, I understand, introduced by HMR&C themselves as a way to save paperwork. They had staff all over the place spending £2-£3 here and there for lunches whilst on detached duty so, rather than having to process all those claims, they said that everyone could just claim £3. But, and it is a big but, they could only claim the scale rate if a cost had actually been incurred and it was over and above what they would normally spend on lunch. Therefore, if a member of staff only spent £2.95 they could still claim £3 for lunch but, if they took a packed lunch or weren't at a temporary location they could not claim a penny.

As an aside, some umbrella companies have scale rates of £30-£40 per day which encompass breakfast, lunch and dinner. You should make sure that this claim is not made automatically on your behalf as you would still have to justify the claim should the man from HMR&C come knocking. If you only spend £3 per day you cannot legitimately claim £30 per day.

[Bob Jones]

Lisa - your reply is spot on - both umbrellas and contractors working through umbrellas need to be aware of what is going on --- I am having trouble with HMRC at the moment - one particular person is reluctant to grant the benchmark scale rate in a genuine case (even though they can't refuse it where it is backed up by a satisfactory audit trail)whereas other umbrellas are now paying the benchmark rate on the nod where it seems that they were paying nothing before and, reading betweeen the lines, with no audit trail .. will send personal email when I have time - or if you could ring me or I ring you ... and need to involve Helen ...
Regards, and just got back from the pub ....
Bob