HMRC exemptions – Benchmark scale rates

HMRC have a scale rate system for meal expenses that employees can use instead of claiming actual amounts incurred whilst on a business journey. This can reduce the administration of collecting and recording receipt details.

HMRC have defined allowable rates for meal claims that they will accept without detailed evidence, i.e. receipts and records and without needing the prior approval of HMRC. To qualify for an exemption you must either be paying the benchmark rate or a bespoke rate approved by HMRC or reimbursing the employees actual costs.

Using the HMRC Benchmark rates negates the requirement to retain receipts. However employers will need to have a checking process in place and be able to demonstrate that they satisfy the travel and subsistence qualifying conditions below.

How it works

HMRC have set allowable rates for claims that they will accept without detailed evidence. Provided the employee is travelling on an allowable business journey they are able to claim the set rates without any receipts or proof of spending.

What records are required

Although you won’t need to keep evidence of the expense you must however still have sufficient records to demonstrate the entitlement.

You will therefore need to keep evidence of the business travel. If you are keeping a mileage log that describes where the employee went and the purpose of the journey, this will provide evidence if required.

The scale rates

 Minimum journey time Maximum meal allowance
5 hours £5
10 hours £10
15 hours (and ongoing at 8pm) £25

Where a scale rate of £5 or £10 is paid and the qualifying journey last beyond 8pm a supplemental rate of £10 can be paid to cover the additional expense necessary incurred as a result of working late. A meal is defined as a combination of food and drink.

An employee can only be reimbursed for a meal once: For example if the cost of an evening meal or breakfast is reimbursed because it is involved in the cost of an overnight stay the employee would not also be entitled to the benchmark rate in the respect of meals.

A benchmark rate has not be set for overnight accommodation cost.

Qualifying Conditions

Benchmark scale rates must only be used where all the qualifying conditions are met. The qualifying conditions are:

  • the travel must be in the performance of an employee’s duties or to a temporary place of work, on a journey that is not substantially ordinary commuting.
  • 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 should have incurred a cost on a meal (food and drink) after starting the journey and retained appropriate evidence of their expenditure.

When the scale rate system cannot be used

Payments cannot be made if the employee does not incur an expense for a meal after leaving home, even if the journey was an allowable business journey. The scale rates also cannot be paid when the employee is not travelling on a business journey.

How to apply

You don’t need to apply for an exemption if you’re paying HMRC’s benchmark rates for allowable expenses. However if you want to pay bespoke rates to your employees than you will need to apply to HMRC for an exemption in order to receive these rates.

If you would would like to apply to HMRC for bespoke exemption rates, please contact your account manager for more information.