EIM30073 - Dispensations: travelling and subsistence expenses

When considering applications for dispensations, follow the main instructions on this subject at EIM10010 onwards and EIM34010 onwards.

See EIM30058 regarding payments of expenses to employees using their own vehicles for business travel.

Staying with a friend or relative

When an employee spends a night away from home whilst on business, he may choose to stay with a friend or relative instead of staying in a hotel. The employee may show his gratitude to the host by taking a gift or by paying for an evening meal. The cost of the gift or meal replaces the hotel expenses which the employee would have incurred otherwise. If the employee had stayed in a hotel the employer would normally reimburse the expenses to the employee, and the employee would be entitled to a deduction for a qualifying business expense.

But travel and subsistence expenses are often covered by a dispensation. Consequently if the employer pays the employee a reasonable overnight allowance for expenses incurred staying with the friend or relative, this allowance may be included in a dispensation as long as the employer has processes in place to check that the employee stayed with a friend or relative and that the employee incurred an expense.

It is not intended that this allowance should be similar in amount to the expense of staying in a hotel, nor that the allowance should necessarily meet the full cost of a meal for two. Remember that only the cost of the employee’s meal would be allowed as a qualifying business expense. A payment of up to £25 per night may be considered to be reasonable.