Scale rates for overseas travel
HMRC have published up-to-date benchmark scale rates relevant to employers and employees or directors who travel abroad on business. The benchmark rates are intended to represent the accommodation and subsistence expenses that employees incur during a period spent in a large number of foreign countries.
HMRC benchmark scale rates can be used to reimburse expenses such as accommodation, meals, and local travel, in most countries and regions.
For most countries, there are benchmark rates for the larger cities as well as an “elsewhere” rate. Employers wishing to use the published rates must ensure that they refer to the table entry for the city where the employee stayed, or the elsewhere rate, as appropriate. Rates are quoted in the relevant foreign currency.
Employers do not have to use these benchmark scale rates. Instead you can reimburse the employee based on actual expenses incurred, where those costs are supported by receipts. However, it may be more administrative convenient to make the approved scale rate payment rather than to process every single expense claim.
Where amounts paid for accommodation and subsistence are at or below the benchmark rates those payments can be made free of tax and national insurance contributions. Additionally the employer does not have to include those payments on the forms P11D. However, if the employer does not pay the full scale rate for any reason, and some rates are very generous, the employee cannot claim the difference as an expense on his own tax return.
It is worth noting that the published benchmark rates are in addition to the tax and NI free overnight subsistence allowance permitted of £10 for nights spent outside the UK. The HMRC employment income manual warns that where the subsistence payment exceeds these limits the full amount is taxable, not just the excess.