If we (employer) reimburse an employee for meals based on receipts, can the amounts be higher than the allowance, eg £5 for 5 hours travelling. For example, if employee is working overnight away from their home and our office, and they need breakfast but haven't originally ordered it when booking hotel accommodation, and the cost is £8.99, would that be allowed if we simply reimburse them £8.99 but only on presentation of receipt. Or would that be seen as a benefit?
The benchmark rates are the maximum tax and NICs free amounts that could be paid by employers who choose to use this system. An employer could pay less than this rate if it wants to do so. If a higher amount is paid without agreeing a tailored scale rate with HMRC, the excess should be subject to tax and NICs. Please refer to the following link for full details:
Hi HMRC ADMIN25
I've seen the text that you have quoted but I don't think it answers nickposford's query (which is the same as mine).
As background, the limited company that I work for pays employees travel subsistence based on it's own internal policy which is similar to the conditions of the the benchmark (up to 5 hours, to 10 etc) but has different rates, which are generally higher than the benchmark (but considered reasonable). The Company has a line manager and Finance approval process which includes the providing receipts.
Where the payment exceeds the HRMC's benchmark, does this create additional PAYE/NI?
If so, can this be eliminated by the Company reaching an agreement with HMRC for its bespoke rates?
Please accept my apologies for Admin 25's response on the 15 May 2019, as it was incorrect. You are correct that if you reimburse the employee the actual costs they incurred on meals purchased during genuine business travel then the amount is exempt and does not need to be reported on form P11D. Your employees would need to keep their receipts as proof of the expenses they incurred.
If you pay a 'round sum allowance' instead of reimbursing actual costs, then if the amount you pay is greater than the Benchmark Scale Rates anything paid above the benchmark rates would be subject to tax and NIC, unless you had approval from HMRC to pay a Bespoke Scale Rate
Can I just check. As a limited company the emplyee (Director) puts through all meal, hotel, train receipts. Do these have to be paid back through salary or can a cheque/bacs from the business account can be used to pay?
If they are genuine business expenses and the meal costs are not over the top ie what a normal employee would be reimbursed for they don't need to go through salary and can be reimbursed into the director's bank account.
Provided they are genuine business expenses and are reasonable i.e. meal costs do not include fine dining, the director can be reimbursed directly into his/her personal bank account for the receipted sums. The expenses will not have to be reported on a P11D or through the payroll. However, if the director is solely responsible for examining receipts and reimbursing the expenses, there should be an independent checking system in place. Perhaps an accountant or book-keeper.