Expenses and benefits: incidental overnight expenses
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1. Overview
As an employer providing incidental overnight expenses to your employees, you have certain tax, National Insurance and reporting obligations.
What’s included
‘Incidental overnight expenses’ are personal (non-business) expenses incurred by an employee while travelling overnight on business.
Examples of incidental expenses are:
- buying newspapers
- paying for laundry
- phoning home
2. What's exempt
You don’t have to report or pay anything to HM Revenue and Customs (HMRC) if you pay no more than:
- £5 per night for travel within the UK
- £10 per night for travel outside of the UK
Salary sacrifice arrangements
You do have to report the incidental overnight expenses if they are part of a salary sacrifice arrangement.
3. What to report and pay
If any of the overnight expenses you cover aren’t exempt, you may have to report the costs to HM Revenue and Customs (HMRC), and deduct and pay tax and National Insurance on them.
For expenses above the £5 or £10 threshold, you must:
- report them on form P11D
- deduct and pay PAYE tax and Class 1 National Insurance through your payroll - use the full amount that you pay to your employee, not just the amount above the £5 or £10 threshold
Salary sacrifice arrangements
If the costs are less than the amount of salary given up, report the salary amount instead.
These rules don’t apply to arrangements made before 6 April 2017 - check when the rules will change.
4. Technical guidance
The following guide contains more detailed information: