Per diem and subsistence rates (UK)
HMRC's benchmark scale rates let you pay £5, £10 or £25 for meals on business travel with no tax, no National Insurance and nothing to report. The conditions attached to them are where it goes wrong.
An employer can pay £5 for a qualifying journey of 5 hours or more, £10 at 10 hours or more, and £25 at 15 hours or more where the journey is still going at 8pm (HMRC EIM30240). A further £10 can be added to the £5 or £10 rate when a journey unexpectedly runs past 8pm. Pay within those rates, meet the conditions, and there is no tax, no NI and no P11D entry. The catch that surprises people: the employee still has to have bought a meal and kept the evidence.
The benchmark scale rates
| Qualifying journey | Maximum you can pay | What it is meant to cover |
|---|---|---|
| 5 hours or more | £5 | One meal |
| 10 hours or more | £10 | Two meals |
| 15 hours or more, and ongoing at 8pm | £25 | A full day away, evening meal included |
| Late supplement, added to the £5 or £10 rate | £10 | A journey that unexpectedly runs beyond 8pm |
These are ceilings, not entitlements. You can pay less, and many employers do. You cannot pay more without the excess becoming taxable pay.
The conditions that actually matter
This is the condition most often missed, because "per diem" in other countries means a flat daily allowance paid whether or not anything was spent. HMRC's version does not work that way: the employee must have incurred a cost on food or drink after the journey started and kept appropriate evidence. A scale rate saves you from reimbursing the exact pennies; it does not turn the payment into an allowance. This is why paying a per diem against no receipt at all quietly converts it into taxable pay.
The clock is the period the employee is away from their normal workplace or home, and it has to exceed the band's hours continuously. A 9-hour trip does not become a 10-hour one because the employee also worked an hour at home first.
The supplement is there to rescue a £5 or £10 journey that runs late. The £25 band already requires the journey to be ongoing at 8pm, so its lateness is priced in. Paying £35 for a long evening trip is paying £10 of taxable pay.
Travel from home to a permanent workplace is not business travel, whatever time it happens. A workplace counts as temporary until the employee has spent, or is likely to spend, 40% or more of their working time there over a period lasting more than 24 months - at which point it becomes permanent and the subsistence stops qualifying, even mid-project.
Scale rates or actual receipts: which to run
Both are legitimate. The trade is administrative, not financial.
- Benchmark scale rates pay a fixed amount per band. Finance checks the journey qualified, not the amount. Good where lots of people travel similar patterns.
- Actual cost reimbursement pays what was spent, against the receipt. No band conditions to apply, but every claim needs checking line by line, and there is no cap unless your policy sets one.
Nothing stops you running both - scale rates for day travel, actuals for overnight stays, which is the most common split. What you cannot do is let people choose per trip whichever is higher, because that is how a scale-rate system becomes a taxable one.
Overseas travel
The benchmark rates above are for travel within the UK. HMRC publishes a separate set of worldwide subsistence rates by city and country, with their own hourly bands and room rates. If your team travels abroad regularly, your policy should name that table rather than trying to stretch the £5/£10/£25 scale over it.
Setting a per-diem rate in practice
- Decide whether you are paying the HMRC maximums or something lower, and say so in the policy.
- Decide who approves a journey as qualifying, and when - before travel is far easier than after.
- Require the receipt anyway. It is a condition of the exemption, and it is the only thing that proves the meal happened.
- Record the hours away on the claim, because the band depends on them and nobody remembers three weeks later.
- Review annually. The scale rates have not moved since 2016, but the point at which they stop covering a sandwich and a coffee has.
Our expenses policy template has all five written as clauses, and the mileage claim calculator handles the travel half of the same trip.
Keep reading: All 66 HR guides · 30 free templates · 24 calculators
Per diems that apply their own rules
CoDash picks the band from the hours away, refuses to stack the late supplement on the £25 rate, and still asks for the receipt - so what reaches payroll is already inside the exemption.