Expenses policy

An expenses policy answers the questions that otherwise arrive one at a time: what the business pays for, at what rate, with what evidence, approved by whom and by when, and what happens when a claim is wrong. It also has to work for tax, because expenses paid outside the rules are taxable benefits and HMRC expects records, and it overlaps with the anti-bribery rules where hospitality is involved. I draft the policy for the employer as part of the handbook and core policies for a fixed fee of £995, delivered in five working days; the tax treatment is confirmed by the employer's accountants.

Who this is for

Employers in England and Wales whose staff travel, entertain or buy things for the business, and employers whose expenses are handled by custom rather than by a document.

What matters in an expenses policy

What the employer pays for and what it does not

The policy should state the principle (expenses incurred wholly, exclusively and necessarily in the performance of duties are reimbursed; personal expenses are not), the categories (travel, subsistence, accommodation, entertaining, equipment, training, professional subscriptions, home working costs), the exclusions (commuting to the normal place of work, fines, personal items, upgrades), and the rule that an expense needs prior approval above a stated amount or outside the categories; a policy that lists what is covered and what is not removes the argument about the taxi that was reasonable in the circumstances.

Travel, mileage and the approved rates

The policy should set the travel rules (the class of travel, booking through the employer's arrangements, the cheapest reasonable fare, the treatment of travel from home to a temporary workplace), mileage for staff using their own vehicles at HMRC's approved mileage allowance payment rates under section 229 of the Income Tax (Earnings and Pensions) Act 2003 (which are tax-free up to the approved amount), the requirement for business insurance and a licence check for staff who drive their own cars for work, and the position on company cars and fuel; mileage above the approved rate is taxable and below it the employee may claim relief, which the policy should say.

Subsistence, accommodation and the limits

The policy should set the limits for meals when travelling (actual costs within a limit, or the benchmark scale rates HMRC allows without receipts where the employer has the checking system the rules require), the rules for overnight accommodation (booking, the standard, incidental overnight expenses within the exempt amount), the treatment of alcohol, and the rules for entertaining clients (approval, the purpose recorded, the attendees listed, the anti-bribery policy applied); limits stated in the policy are easier to apply than reasonableness judged claim by claim.

Claims, receipts, approval and the timetable

The policy should set the claim process (the system or form, the receipts required for every item except mileage and scale rates, the information each claim must carry), the approval (the line manager, with a second approver above a stated amount and no self-approval), the timetable (claims within a stated period after the expense, paid in the next payroll or by a stated date), the treatment of corporate cards and advances, and the position on late claims; a claim without a receipt is the employer's problem with HMRC, and the policy should make receipts non-negotiable.

The tax treatment and the records HMRC expects

Expenses reimbursed within the rules are exempt from tax under the exemption for paid or reimbursed expenses in the Income Tax (Earnings and Pensions) Act 2003 provided the employer checks that they were incurred and were deductible, and the policy should state the checking process, the records kept for the period HMRC requires, the treatment of items that are benefits in kind (reported on the annual return or through a settlement agreement with HMRC), trivial benefits within the exemption, and home working payments within the exempt amount under section 316A of that Act; the accountants confirm the tax treatment and the policy records the process that supports it.

Overclaims, recovery and the bribery and hospitality overlap

The policy should state that overclaims and false claims are disciplinary matters (a false expenses claim is dishonesty and gross misconduct), that the employer may recover overpayments by deduction with the written consent section 13 of the Employment Rights Act 1996 requires, that expenses incurred in breach of the anti-bribery policy (hospitality to public officials, gifts above the limits, anything during a tender) will not be reimbursed, and that the expenses records form part of the employer's adequate procedures under section 7 of the Bribery Act 2010; the policy should be non-contractual and reviewed when the rates change.

What it costs

Staff handbook and core policies, £995. Five working days.

Employment contract, £595. One template you can reuse for a grade of staff. Five working days.

Buying online forms the engagement on payment. The scope is what the employment contracts and handbooks page describes, you accept the Terms of Service at checkout, and I email you within four working hours to get started. If you would rather ask something first, email me.

What you get

• A bespoke contract drafted for how you employ people
• Restrictive covenants drafted at a scope a court will uphold
• Confidentiality and intellectual property provisions that put ownership where it belongs
• The statutory particulars, so the document does the job section 1 of the Employment Rights Act 1996 requires it to do
• Flexibility clauses where you genuinely need them, drafted to survive challenge
• Core policies: disciplinary, grievance, sickness absence, equal opportunities, data protection and, increasingly, AI use
• One round of amendments

What is not included

• Acting for employees
• Employment tribunal representation
• Payroll, pensions auto-enrolment and tax
• Immigration and sponsor licence work
• Day to day HR handling, disciplinaries, grievances and redundancy processes

Questions I am often asked

Can we pay staff a fixed daily allowance when they travel?

Within HMRC's benchmark scale rates and with the checking system the rules require, without receipts for the meals. Above the rates, or without the system, the payments are taxable. The policy sets the rates and the process.

An employee claimed for a dinner that was personal. What can we do?

Treat a deliberate false claim as dishonesty under the disciplinary procedure, and recover the overpayment by deduction with the written consent the policy provides. A mistake is corrected; a false claim is misconduct.

Is mileage at the HMRC rate tax-free?

Up to the approved amount, yes, with business insurance and a licence in place. Above it the excess is taxable; below it the employee can claim relief. The policy states the rate and the conditions.

Related guidance and services

• Employment contracts and handbooks, £995, the service this page describes
• Consultancy and contractor agreements, £595
• Anti-bribery policy
• Driving for work policy

This page is general guidance for businesses in England and Wales, not advice on your own circumstances. Last reviewed: October 2026. Email geoffrey@caesar.co.uk.