Expense Reimbursement policy in the United Kingdom



Modified on: Wed, 3 Sep, 2025 at 2:34 PM

TABLE OF CONTENTS



This article outlines the policies and procedures for travel, mileage, invoicing, and reimbursement of business expenses for employees based in the United Kingdom. 


Invoicing and Documentation

  • Invoices are required for larger items or when specified. They must include:
    • Company name
    • Tax ID

When relevant, list Horizons as the purchasing entity:

  • Horizons Global Technology UK Limited
  • Address: BDO LLP, First Floor North, Bottle Works, The Barrs, Guildford, Surrey, GU1 4LP

Note: There is no statutory invoice threshold under UK law; requirements depend on company policy or materiality.


Reimbursement and Taxability

The following are typically non-taxable when properly documented:

  • Business mileage (within AMAP limits)
  • Standard travel costs (transport, parking, lodging)
  • Meals/subsistence within HMRC allowances


Per Diem Rates 

Meal allowances for business travel within the UK are based on the length of the journey. These allowances are designed to cover the cost of meals during extended business trips and should be claimed accordingly.

The following rates apply:

Travel DurationAllowance
One meal (≥ 5 hours)Up to £5
Two meals (≥ 10 hours)Up to £10
Late evening meal (after 8 PM)Up to £15
24-hour period (all meals)Up to £25
Incidental overnight expenses£5/night (UK), £10/night (abroad)

Restrictions on Per Diem Claims

Employees cannot claim per diem allowances in the following situations:

  • No meal or beverage is purchased.

  • The meal does not constitute additional expenditure.

  • The "staying with friends or relatives allowance" is claimed (in which case, the 24-hour claim is not allowed).

  • Meals are taken at home.

  • Meals are provided during a training course, conference, or similar activity.

  • Meals are included in the ticket cost for travel by train or plane.

  • Alcohol cannot form part of any claim.


Entertainment and Gifts

  • Must be justified.
  • Taxable if not directly business-related.
  • Subject to company policy limits.


Health and Wellness

Generally not reimbursable unless:

  • Directly related to health and safety
  • Covered by a company health plan

Examples of non-reimbursable items:

  • Gym memberships
  • Yoga classes
  • Similar personal wellness activities


VAT

  • VAT is reclaimable if:
    • Properly invoiced
    • Expense is business-related


Travel and Mileage

Mileage Rates

Vehicle TypeRate
Cars & Vans£0.45/mile (first 10,000 miles), £0.25/mile thereafter
Motorcycles£0.24/mile (no threshold)
Bicycles£0.20/mile (no limit)

Employees who use their own vehicles for business travel can claim mileage expenses. HMRC provides approved mileage rates depending on the type of vehicle used. Employees should maintain a detailed mileage log, recording each journey's date, purpose, start and end locations, and the total miles traveled. This log is crucial for substantiating mileage claims. 

Mileage logs must include:

  • Date
  • Start/end postcodes
  • Purpose of travel
  • Passenger payments: Up to 5p/mile per passenger (tax-free) for business travel with colleagues.


Parking and Toll

  • Submit as separate expense items.
  • Must include receipts.
  • Do not include in mileage logs.


Business Travel Restrictions

  • No statutory cap on business travel.
  • Reimbursement must not exceed HMRC-approved rates for tax-free treatment.

Transport Service Rules

Applies to: Air, bus, train, tram, taxis, rental cars

Requirements:

  • Receipts
  • Approval

Travel should be in the lowest practical fare/class (e.g., economy or standard).

First-class travel requires justification. 


Best Practices for Expense Claims

To ensure smooth processing of expense claims:

  • Always collect and store receipts that meet HMRC's requirements.

  • Maintain accurate logs for mileage and any other travel-related expenses.

  • Familiarize yourself with the applicable per diem rates, especially for international travel.

  • Submit claims promptly to avoid any delays in reimbursement.

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