Employees Working Abroad

By | 2 August 2008

A welcome simplification

It is becoming more common in this age of international markets for businesses to send employees on overseas assignments. This will result in accommodation and subsistence expenses being incurred, which normally requires the employee to obtain expense receipts for P11D purposes. Fortunately, a welcome optional simplification of the rules regarding accommodation and subsistence payments to employees traveling outside the UK was announced earlier this year.

Scale rates

HMRC have published tables of ‘benchmark scale rates’ that employers can use to pay accommodation and subsistence expenses to employees traveling abroad on employment duties, without income tax or NIC, or the need for the employees to produce expenses receipts. HMRC’s Employment Income Manual confirms that employers do not need to report payments within those rates on the employee’s form P11D (EIM5250). In addition to these tax and NIC-free expenses, employers may also pay or reimburse employees for ‘Incidental overnight expenses’ of up to £10 per night during periods of work overseas in appropriate cases (ITEPA 2003, ss 240-241).

The benchmark scale rate tables for accommodation and subsistence expenses payments to employees traveling outside the UK, together with accompanying guidance, can be accessed via the HMRC website. The tables run to 136 pages in total, and contain various rates (e.g. a ‘room rate’ per night and a ‘subsistence only rate’) covering a wide range of countries and regions. The Employment Income Manual includes examples of how the HMRC published rates may be used by employers to reimburse employees’ accommodation and subsistence expenses for travel outside the UK. This guidance can be accessed via the HMRC website.�