Agreeing with HMRC bespoke rates for expenses

Produced by Tolley in association with

Employment Tax

Guidance

There is a mechanism to agree bespoke scale rates with HMRC in relation to the exemption for expenses matched by an allowable deduction (see the Expenses and benefits matched by allowable deductions guidance note).

In order to obtain agreement to use scale rate payments or subsistence allowances, the employer will need to demonstrate to HMRC that someone other than the employee incurring the expense is responsible for ensuring that the allowances claimed relate to qualifying travel / subsistence and will also need to satisfy HMRC that the allowances are not ‘excessive’. Where all expenses are expected to be supported by receipts, it is unlikely that HMRC would request a sampling exercise.

Assuming the application by the employer is accepted, HMRC will issue an ‘approval notice’ setting out the terms of the agreement. HMRC approval for bespoke rates lasts for a maximum of five years from the date of the agreement.

Bespoke rates for particular industries and groups

It is also possible for representatives of particular industry groups to agree bespoke rates

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Robert Woodward

Employment Tax Manager at Frank Hirth plc

Robert is an expert in UK employment tax matters for employers with UK based employees, including UK employees working overseas, and overseas employees coming to the UK. He has extensive experience of advising clients with regards to PAYE matters, employee benefits and social security as well as employment related payments outside the payroll functions such as termination settlements and payments to consultants and other non-payroll labour. After graduating in Politics and Law from the University of Southampton, Robert started his tax career at HMRC as an employer compliance officer undertaking enquiries into employers' expenses and benefits systems before moving into a large international practice and then into the Big 4. Here he assisted with tax investigations, flexible benefits planning, employment tax compliance and international social security. Robert has presented to various audiences and has had a number of articles published in various magazines on employment tax matters. Robert is a fully qualified member of both the Association of Taxation Technicians (ATT) and the Chartered Institute of Taxation (CTA).

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