Subsistence payments to employees
New benchmark rates for subsistence payments have been announced. These new rates, applicable from 6 April 2009, can be paid to employees free of tax and National Insurance.
The benchmark rates are as follows:
- £5 Breakfast rate – May be paid where a worker leaves home earlier than usual and before 6.00 am and incurs a cost on a breakfast taken away from his home.
- £5 One meal rate (Five hour rate) – May be paid to employees working away from their usual place of work or home for a period of at least five hours and incurring the cost of a meal.
- £10 Two meal rate (Ten hour rate) – May be paid to employees working away from their usual place of work or home for a period of at least ten hours and incurring the cost of a meal.
- £15 Late evening meal rate – May be paid where an employee works later than usual, finishing work after 8.00 pm. This payment is in lieu of a meal that would usually have been eaten outside of work hours.
In order to qualify for these payments all the following conditions must be met:
- The expenses must have been incurred as part of an employee’s duties or whilst travelling to a temporary work place;
- The employee should be absent from his normal place of work or home for a continuous period in excess of five hours for the one meal rate or ten hours for the two meal rate;
- The costs should have been incurred after the journey commenced.
The new benchmark rates are not compulsory. Employers can continue to reimburse actual expenditure or continue using an existing dispensation. The new rates only apply for daily expenses, overnight rates must either be for the actual costs incurred or as agreed with HMRC.