If your employer provides a subsistence allowance to cover meals, travel or accommodation, it's important to understand whether it's tax-free or taxable.
Reimbursed Expenses (Tax Free)
If your employer reimburses actual costs (with receipts) for work-related travel, meals or accommodation, these payments are not taxable and won’t appear on your payslip.
Flat Rate Payments (Taxable)
If you're given a fixed daily/weekly allowance without needing receipts, HMRC treats it as taxable income. This means it is subject to PAYE tax and National Insurance and will be added to your payslip.
What Can You Do?
- Check with your employer if they can process expenses via reimbursement instead. Ask your employer if they can reimburse your actual expenses (based on receipts) instead of giving you a flat rate allowance. Reimbursed expenses (with receipts) are tax free.
- Flat-rate payments are taxable - they are treated as income, so you pay tax and National Insurance on them. Claim tax relief on work related expenses if you personally paid for travel, meals or accommodation. You can only claim tax relief on the part you personally paid for and were not reimbursed by your employer. If your employer covered the costs (even through a taxable flat-rate allowance), you cannot claim additional tax relief.
NOTE - if your employer has already reimbursed you for hotel and travel expenses (even at a flat rate), you cannot claim again for those same expenses from HMRC.
You can claim tax relief on work related expenses if you personally paid for travel, meals or accommodation. You can only claim tax relief on the part you personally paid for and were not reimbursed by your employer.
If your employer covered the costs (even through a taxable flat rate allowance), you cannot claim additional tax relief.
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