Reply to: FreeAgent practicality - best way to record Per Diem allowances?

[Chart Accountancy]

Yeah, thats why I went back on the idea, and kept recording the actual payments.

But as above, that seems to be changing next year, as the checking requirements are reduced only to checking that the employee was on business travel. Hence no link to actual costs, nor requirement to retain receipts. So if that is actually the case, then after the Finance Bill comes out, I'll change to recording the set £25 per night, and not record the actual expenses.

Yes, changes will be introduced to the requirement for employers to check receipts for subsistence under the benchmark rates, so you may be in a better position to claim for these from the next tax year and keep the receipts until then.

[kryten22uk]

Payments at the benchmark rate would require the employer to have a checking system in place. In a single director company, this requirement would be difficult to satisfy as someone other than the employee (director) incurring the expense needs to be responsible for ensuring that the payment: 1) relates to qualifying travel in the case of travel and subsistence expenses 2) does not include disallowable items 3) and is not excessive. Therefore, there is the risk that HMRC may refuse to accept such claims in case of an enquiry. It is better to claim the actual expenses incurred. If you use a cloud system such as FreeAgent or Xero, you can update the expenses through a mobile app as soon as you incur the cost.

Yeah, thats why I went back on the idea, and kept recording the actual payments.

But as above, that seems to be changing next year, as the checking requirements are reduced only to checking that the employee was on business travel. Hence no link to actual costs, nor requirement to retain receipts. So if that is actually the case, then after the Finance Bill comes out, I'll change to recording the set £25 per night, and not record the actual expenses.

[Chart Accountancy]

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.

Payments at the benchmark rate would require the employer to have a checking system in place. In a single director company, this requirement would be difficult to satisfy as someone other than the employee (director) incurring the expense needs to be responsible for ensuring that the payment: 1) relates to qualifying travel in the case of travel and subsistence expenses 2) does not include disallowable items 3) and is not excessive. Therefore, there is the risk that HMRC may refuse to accept such claims in case of an enquiry. It is better to claim the actual expenses incurred. If you use a cloud system such as FreeAgent or Xero, you can update the expenses through a mobile app as soon as you incur the cost.

With regard to incidental expenses, these are to cover personal expenses incurred when travelling overnight on business, £5 per night within the UK and £10 per night for travel outside of the UK. These are expenses which if reimbursed otherwise would be taxable benefit but exempt if paid when the employee is travelling on business. Round sum claims are never allowable and any set allowances claimed are to be for expenses actually incurred. The incidental expenses can be calculated as an average amount incurred per night for a business trip: EIM02770 - Employment Income Manual - HMRC internal manual - GOV.UK

[kryten22uk]

Seems like the per Diem scale rates are becoming a given allowance, with no further requirement to prove spend or retain receipts. In effect then this is £25 for food, the exactly same way as the £5 per night UK incidentals allowance is for newspapers/calls etc. Only requirement is to prove the employee was indeed travelling (which should be evident by the hotel bills). So
Abolition of receipt checking for benchmark scale rates and changes to overseas scale rates - GOV.UK

[Lance]

I upload all receipts to FA. Primarily because the accountant won't reclaim VAT unless they can see it.
If there's a weeks worth, of VAT ones, I photo the lot in one image and upload that as one claim.

[northernladuk]

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.

Ahhh.. now we are getting somewhere.

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.

That's what I do. Once every couple of weeks I just get all the receipts out, tot them up and enter the relevant amounts in FA, staple them together and throw them in a box file.
No administrative burden. Sorted.

[Spoiler]

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.

Incidental overnight expenses

I used to add this under Travel (0% VAT rated) in FA.

[Lance]

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.

sigh....


LMGTFY

[northernladuk]

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.

Expenses and benefits: incidental overnight expenses - GOV.UK

[Lance]

my accountant was the one who asked/suggested that I just submit the £25 allowance.

Sounds like your accountant is trying to reduce his own workload. Ask him/her for a refund if you use this method.

[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.

[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.

[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]

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.

[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.