Expenses Policy (UK) by OLL
Employee expenses policy for UK businesses covering travel, subsistence, and homeworking
EMPLOYEE EXPENSES POLICY
This policy is issued by [employer name] (the "Company") and applies from [policy effective date].
Note: This policy tells employees what the Company will pay for, how to claim it, and what happens if a claim falls outside the rules. It is written around the HM Revenue and Customs (HMRC) limits, because staying inside those limits is what keeps a reimbursement free of tax and off a tax return. Where the Company chooses to pay more than the HMRC figure, the excess is taxable, and this policy says so at the relevant point.
1. PURPOSE AND SCOPE
1.1 This policy applies to all employees of the Company. It covers expenses an employee pays personally, and expenses charged to a Company card. It does not form part of any employee's contract of employment, and the Company may change it at any time.
1.2 The Company will reimburse expenses that are incurred wholly for the Company's business, are reasonable in amount, are supported by evidence, and are claimed in accordance with this policy.
Note: Keeping the policy non-contractual lets the Company update the rates and limits when HMRC figures change, without needing each employee's agreement. If it is written into the contract instead, every change becomes a contractual variation.
2. GENERAL PRINCIPLES
2.1 An expense is claimable only if the employee would not have incurred it but for the Company's business. Where a cost has both a business and a personal element, only the business element may be claimed, and the claim must show how the split was calculated.
2.2 Employees are expected to choose the most cost-effective option reasonably available, taking account of the time involved and the purpose of the trip.
Note: The tax rules behind this are stricter than most people expect. A deduction is only allowed where the expense is incurred in the actual performance of the duties of the employment, and a cost that merely puts the employee in a position to do the job does not qualify. This is why the Company cannot reimburse home to office travel free of tax, however early the start.
3. APPROVAL AND COMPANY CARDS
3.1 Prior approval. Expenses above [approval threshold amount], and all overseas travel, must be approved in advance by [senior approver job title]. Expenses below that figure need the approval of the employee's line manager.
3.2 Company cards. A Company card may be used only for business expenditure permitted by this policy. Personal use is not permitted. A cardholder must submit receipts for every transaction through [expense system or claim method] within the deadline in Clause 4.1.
3.3 No self-approval. No employee may approve their own expense claim, or the claim of a person to whom they report.
4. MAKING A CLAIM AND REIMBURSEMENT
4.1 Deadline. Claims must be submitted through [expense system or claim method] within [claim submission deadline in days] days of the date the expense was incurred. The Company may decline a claim submitted after that.
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About this template
What is this template?
This document is an internal workplace policy governing the reimbursement of business expenses. It contains specific HMRC benchmark rates for mileage (55p/25p) and meal allowances (£5/£10/£25), and it is not a binding employment contract. It includes a dedicated section for homeworking allowances and personal incidental overnight costs.
When should you use it?
Use this policy when you need to define what business costs employees can claim and how they must prove expenditure. If you need to make the expenses terms legally binding and immutable without individual consent, use an Employment Contract with a dedicated expenses clause instead.
What's inside
| Clause | Name | What it does |
|---|---|---|
| 1 | PURPOSE AND SCOPE | Applies to all employees for personal and Company card expenditure but is expressly non-contractual and subject to change. |
| 3 | APPROVAL AND COMPANY CARDS | Requires prior approval for expenses above the [approval threshold amount] and forbids personal use of Company cards. |
| 4 | MAKING A CLAIM AND REIMBURSEMENT | Establishes a submission deadline of [claim submission deadline in days] and requires itemised receipts for all VAT recovery. |
| 5 | BUSINESS TRAVEL | Prohibits reimbursement for ordinary commuting between an employee's home and their permanent workplace per ITEPA 2003 s.338. |
| 6 | MILEAGE IN YOUR OWN VEHICLE | Permits claims at 55p per mile for the first 10,000 miles and 5p for each qualifying passenger. |
| 7 | ACCOMMODATION AND SUBSISTENCE | Sets nightly room limits and offers a choice between flat meal allowances or reimbursement of actual costs. |
| 8 | HOMEWORKING COSTS | Provides a contribution of [homeworking allowance amount] towards additional household costs like heating and lighting. |
| 12 | MISUSE, RECOVERY AND CHANGES | Classifies inflated claims as potential gross misconduct and specifies that recovery requires a separate written contractual term. |
Who it's for
- a UK employer setting standard reimbursement rates for staff travel and subsistence
- a company aligning its internal spending limits with current HMRC tax-free benchmarks
- an organization managing business mileage for employees using personal vehicles
- a business implementing a non-contractual policy for workplace expenses and company cards
Law it's drafted under
England & Wales note
This version is drafted for England & Wales. Scotland and Northern Ireland differ on some points — for example notice periods and tribunal procedure. Tell GitLaw where you hire and it adjusts the draft.
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