In the UK, HM Revenue and Customs (HMRC) allows you to claim business expenses under the term “subsistence allowance.” But, what is included in a subsistence allowance? What is not? And how can finance managers claim it?Let's find out.

Subsistence allowance is the money given to employees to cover business expenses incurred as a result of performing their work duties. This includes meals and drinks, accommodation, car parking charges and more. Put simply, subsistence refers to the cost of sustaining an employee when they’re travelling for business.Admin professionals who

manage business travel expenses

, know that these subsistence rates can vary depending on the employee's seniority and location of travel. For example, accommodation allowances are higher for employees travelling to London than they are for those travelling to Leeds.These expenses can be written off as business costs, meaning they’re not liable for taxation or national insurance. You are also able to claim back any VAT spent on these.

HMRC sets conditions

and standard rates which you can claim back any tax spent on these. These standard rates enable businesses to give subsistence payments without constant authorisation and approval. When looking for this online, you will see HMRC call these "scale rate payments".The main stipulations required to claim meal expenses are:As of April 2019, HMRC no longer requires businesses to provide receipts for every cost incurred as part of a business journey. This means a lot less reimbursement paperwork for business owners, finance teams and claimants.Now businesses can claim a set amount for each day of travel and only need to demonstrate that an employee has incurred some kind of expense during their business trip. So, if an employee on a business trip eats three meals, they only need to provide proof (a receipt) for the evening meal, for example.

In the UK, meal allowances are not taxable. This has been the case since 1998.Given the expenses meet the stipulations outlined in the previous section, businesses can deduct the allowances from their taxable revenue. This leaves less taxable incomes and reduces the amount paid to HMRC.These expenses cannot be claimed if:

HMRC updates the exact amounts that can be claimed as part of subsistence allowance in the UK every year, so make sure to check the official HMRC rates to ensure that you have the latest up-to-date information. As of January, 2023

the official HMRC meal allowance rates for UK business travel

are:Many companies will have higher per diem rates for C-level executives, or just a more generous travel budget. However, if these rates are exceeded, tax is due on the excess.

The UK government has no agreed benchmark scale rates for overnight stay expenses, unlike its international rates below. If this working away from home allowance is a recurring cost for your business, you will need to establish an agreed rate with HMRC. See the

HMRC page on bespoke agreements

for more information.

For UK-based companies,

HMRC has a full list of recommended allowance rates by country

. Here are the meal allowance rates and room rates for some of the most common business destinations:United States: (USD)

You do this in the same way you report all of your spending to HMRC. Usually, that means at the end of the tax year a business submits a

P11D

form, directly to HMRC, for each employee that was subject to expenses/per diem/meal allowance. You may also need to submit an additional form called P11D(b).A full guide to expense and benefits reporting can be found on

HMRC's website.

It's important to have employees submit

expense reports

on a regular basis or after every trip for subsistence expenses. Given the wide definition applied to these expenses, it is important to keep an eye out for false claims, exaggerated vs actual costs or other

cases of expense fraud.