HMRC SETS A BENCHMARK FOR SUBSISTENCE

From April 2009 HMRC has agreed to allow a new system of benchmark "round sum" allowances to be paid to employees who buy meals when travelling, provided they are within these rates and the employee incurs the cost.

The benchmark rates, which will be free of tax and National Insurance Charges are:

• £5 for breakfast if the employee sets out before 6 am

• £5 for lunch when out for over 5 hours

• £10 for lunch and dinner when out for over 10 hours

• An additional £15 if working after 8 pm

The early and late timings relate to this being outside the employee's ordinary working pattern and a P11D dispensation must still be obtained for these payments, or they will need to be included on a P11D. If an employer pays subsistence to employees who have to stay overnight, they can either reimburse the actual cost incurred by the employee or agree a tailored scale rate to cover meals and other expenses in a dispensation with HMRC. Employers can pay less than this rate if they choose to do so but these benchmark rates are the maximum that could be paid by employers and in order to qualify for these rates the following conditions need to be met:

• the travel must be in the performance of an employee's duties or a temporary place of work

• the employee should be absent from his normal place of work or home for a continuous period in excess of five hours or ten hours

• the employee must have incurred a cost on a meal (food and drink) after starting their journey

An employer will need to keep sufficient records to be able to demonstrate that the employee was entitled to the payment and they also need to be able to demonstrate that routine checks are undertaken to ensure that the travel expenses rules are being followed. However, employers do not have to use the benchmark rates. They can reimburse their employees' actual expenditure or apply to HMRC to agree a scale rate appropriate for their business needs in a dispensation. For further information, please contact Nick Mayers on 01242 252555 or e-mail: This e-mail address is being protected from spambots, you need JavaScript enabled to view it