HMRC introduced a set of advisory benchmark scale rate payments that employers can use to reimburse staff for subsistence expenses when they are travelling on business away from their normal workplace. If the employer wishes to use this system these rates are the maximum that the employer can pay without attracting a tax and/or national insurance liability for the employee or employer. The employer can pay less than these rates if they so wish. Higher tailored rates may be agreed with HMRC but if higher rates are paid without agreement with HMRC, the excess above the benchmark scale rates is liable to tax and national insurance contributions (NICs) under PAYE.

The benchmark rates that were set in April 2009 are as follows: 

HMRC will consider revising the rates when there is a change in the scale rate of plus or minus 10% based on the change in the Consumer Price Index from when it was last revised.

Breakfast rate - The rate may be paid where an employee leaves home earlier than usual and before 6.00 am and incurs a cost on breakfast taken away from his home after the qualifying journey has started. If an employee usually leaves before 6.00 am the breakfast rate does not apply.

Late evening meal rate - The rate may be paid where the employee has to work later than usual, finishes work after 8.00 pm having worked his normal day and has to buy a meal before the qualifying journey ends which he would usually have at home.

The breakfast and late evening meal rates are for use in exceptional circumstances only and are not intended for employees with regular early or late work patterns. (see HMRC examples).

One meal (5 hour) rate - The rate may be paid where the employee has been undertaking qualifying travel for a period of at least 5 hours and has incurred the cost of a meal.

Two meal (10 hour) rate - The rate may be paid where the employee has been undertaking qualifying travel for a period of at least 10 hours and has incurred the cost of a meal or meals.

Benchmark scale rate payments must be limited to three meal rates on one day or 24 hour period. A meal is defined as a combination of food and drink and would take a normal dictionary meaning.

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

1. the travel must be in the performance of an employee’s duties or to a temporary place of work
2. 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
3. the employee should have incurred a cost on a meal (food and drink) after starting the journey

These benchmark scale rates would not apply to employees covered by Working Rule Agreements, for which separate specific rates are already set for particular occupations.

Subsistence payments using these benchmark scale rates made to directors and employees earning at a rate of £8,500 or more per annum still need to be reported at the end of the year under section N on form P11D, return of expenses and benefits, unless a dispensation is agreed to cover these items.

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