Travel and Subsistence expenses while abroad

Travel and Subsistence expenses while abroad

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Hi,

I have a case where an employer is sending 2 employees abroad for 6 months and will be covering their travel and subsistence cost plus paying an incidental expenses of no more than £10 per night.

Should 1) Employer pay directly for travel and subsistence expenses (e.g by providing the employees with a corporate credit cards), or  2) the employee paying the expenses themselves and getting them reimbursed by the employer.

Reading the HRMC guide 490 it looks to me that option 2 is lighter on documentation as the empoyer will not be required to operate PAYE on the expenses, whereas if option 1 is chosen all incurred and rembursed expenses need to be reported on P11D and than relief claimed by the employees.

Am I reading the HMRC guide correctly?

Thanks

Nikolay

Replies (8)

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By johngroganjga
29th Aug 2014 19:25

Subsistence
.

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By GuestXXX
17th Mar 2015 17:19

.

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By Manchester_man
29th Aug 2014 23:04

Do you mean subsistence or sustenance?

:-)

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By n.i.atanasov
01st Sep 2014 22:09

Spelling haywire

Looking back at my post I spelled subsistence in 3 different ways!

Any answers of substance appreciated:)

 

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By youngmckellar
04th Sep 2014 11:54

Hi

Here is my take on it;

As the place of work is a temporary workplace (<24 months) the costs of business travel/accommodation will be deductible for the employees.  On first principles they should be reported on a P11D and a deduction claimed by the employees via self-assessment. The reporting requirement can be avoided by having a dispensation in place in advance. 

PAYE does not need to be operated on reimbursements of genuine business expenses so no tax/NIC deducted from the reimbursements.

Cheers

D

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By n.i.atanasov
04th Sep 2014 12:37

Thanks for you answer D,
So in the case where the employer pays the expenses directly PAYE needs to be operated and expenses reported on P11d and than employees can claim these as allowable expenses in their selfassessment. Whereas if employees pay for business expenses themselves and than claim back from employer there is no need to operate PAYE on those?
Option 2 seems easier from admin perspective in this case.

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By youngmckellar
04th Sep 2014 13:17

Hi

I don't think option one is quite right in your last post.  If the employer pays for the hotel and other allowable travel costs directly this should not been classed as employment income of the employees and there should be no PAYE/NIC.  Your scenario involves the employer paying a business expense direct to a supplier - as the expense confers no personal benefit on the employee they have nothing to declare.

An equivalent scenario springs to mind - if an employer sends an employee on a training course and pays the course provider directly there is no PAYE/NIC to consider as the course is not a taxable benefit for the employee.

The difficulty if the employees are provided with credit cards is tracking the spend as non-personal or business.

Happy to stand corrected if I am off the mark here.

Cheers

D

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By n.i.atanasov
23rd Sep 2014 16:56

I have settled to using the HMRC scale rates

Thanks D

I read a bit more on the matter, and looks like the simplest way to approach this is for the employees to cover their own expenses and then the employer to reimburse them using the scale rates published by HMRC plus the £10 allowance for accidental expenses while abroad. Both payments will be outside the scope of P11D and tax and NICs does the minimum hassle for both employer and employee.

 

http://www.hmrc.gov.uk/employers/emp-income-scale-rates.htm

Nikolay

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