Table of Content
BIM
Personal Expense Policy
Print this Page
Close this Page

1. Personal Expense Policy:
1. This standard expense policy applies to all employees of the company and may effect contractors working with and as employees.
2. This policy is subject to regular review and revision by the company to remain compliant with HMRC allowances, rules and regulations.
3. A VAT receipt shows the company VAT number. A credit card receipt is not a VAT receipt.
4. Every expense must be WHOLLY and EXCLUSIVELY for the purpose of doing business for the company.
UK HMRC Allowances 2019.

2. Normal Place of Work:
1. Every person has assigned their normal place of work that shall be a named office where post, meetings, email, phone calls and administrative business is undertaken.
2. Key people have the right to work from home for some of the time, however their service contract nominates their normal place of work as being a named office.
3. People commuting to and from their normal place of work do so at their own cost.
4. HMRC put a lot of effort into making sure that commuting from home to and from the normal place of work is NOT as business expense.   People are advised to record every trip to demonstrate the large variety of places that a person must visit, including more than one place per day.   Time sheets provide people with the evidence needed to demonstrate compliance with regulatory tax guidance.

3. Trips:
1. People working with the company are expected to visit customers, suppliers and client work places from time to time.   Trips to meet with many different business associates on the same day are expected.
2. For the company to keep a register of where people are day-by-day, people are provided with an online time sheet application that can be kept up to date with their mobile phone.
3. Every person has a duty to manage their own time sheet and to keep the company informed of what trips they make each day.
4. When people are not at head office and are on a trip to meet with a business associate, they are known as on-the-road.
5. Reasonable travel expenses may be claimed for people when they are on-the-road.   Travel by bus, train, air and ocean may be claimed as a travel expense at cost with an applicable VAT receipt.   Travel by private vehicle may be claimed as the published HMRC allowance such as 45 pence per mile for the first 10,000 miles.
6. Fuel receipts may not be claimed as an expense, but fuel receipts may be retained as evidence of business trips made to distant places.

3b. Travel Mileage Allowances:
1. From 2011 to present, the HMRC allowance for use of one specific personal vehicle is:
  45 pence per mile for the first 10,000 miles. £4,500.00 for 10k miles per year.
  25 pence per mile for over 10,000 miles. £7,000.00 for 20k miles per year.
2. An extra 5 pence per mile may be charged when a passenger is in the vehicle on a business journey, but take care how mileage is reported for trips with and without a passenger.
3. Fines for parking or speeding cannot be claimed as a business expense, however parking (and congestion and toll) costs (without VAT) may be claimed.
4. Mileage cannot be claimed for commuting to and from a persons normal place of work - the office.

3c. Actual Cost Basis:
1. An alternative to the travel mileage allowance is actual fuel cost for a specific vehicle.
2. The actual business mileage and actual private mileage must be recorded and the actual fuel cost apportioned by percent.
3. The driver pays the private mileage cost and the company pays the business mileage cost.
4. An obligation on the driver is to record all private mileage trips and all business mileage trips - the actual total fuel bill is also needed so a fuel card would be applicable.

3d. Company Vehicle:
1. It is suggested that benefit in kind charges and fuel charges to the driver cause the effect of a company car to have unreasonable tax costs to the driver.   The car fuel benefit multiplier was 22,600.00 pounds in 2017-8. The Benefit in kind charge was 3,230.00 in 2017-8.
2. Where the company vehicle is a van and that company van is not used for private mileage, then the tax implications on the driver are zero, but the allowance for using a personal vehicle cannot be claimed.

3e. Car Hire:
1. Where a person is directed by the company to work at a distant work place, the person may be entitled to hire a vehicle and claim hotel accommodation.   The cost of the hire car and the cost of fuel is a business expense.
2. Accommodation costs may be claimed with incidental overnight expenses of up to five pounds for newspaper and laundry.

4. Subsistence:
1. People working with the company may claim reasonable food and drink expenses when one-the-road and not at head office.
2. The cost of a mid-day meal may be claimed with an applicable VAT receipt.
3. The cost of a mid-day meal of up to five pounds may be claimed without a receipt. Up to five pounds does not mean every meal is £5.00.
4. Where a person is necessarily on-the-road before 8am, a breakfast meal may be claimed with a VAT receipt or up to five pounds without a receipt.
5. Where a person is necessarily on-the-road after 6pm, an evening meal may be claimed with a VAT receipt or up to five pounds without a receipt.
6. People are not expected normally to be on-the-road before 8am and still on-the-road after 6pm.
7. Entertainment shall not be permitted to be claimed, however 50% of a VAT receipt for two meals may be claimed.

5. Uniform:
1. The company may direct all people to wear a uniform and PPE that is provided for them.   The uniform must be distinctive and not something that could be used as casual wear.
2. The uniform must be worn wholly and exclusively in performing the duties of employment and this excludes any garments that could be used for any other purpose.   Garments worn under a uniform cannot be claimed as part of the uniform.
3. The uniform provided by the company remains the property of the company and must be returned when the person leaves the company.   This ensures that the person is not being given a benefit in kind.

5.1. Example VAT Contractor:
1. Labour is 5 days at 200 per day = 1000 net plus 200 VAT = 1200 gross.
2. Hire expenses are 600 as 500 net plus 100 VAT.
3. Invoice is labour 1000 plus 200 VAT = 1200 and hire as 500 plus 100 = 600. Total is 1500 net plus 300 VAT = 1800.
4. Company pays the invoice as 1500 net plus 300 VAT = 1800.
5. Contractor income is 1800 as 1500 net plus 300 VAT.
6. Contractor outgoing is 600 as 500 net plus 100 VAT.
7. Contractor pays VAT to HMRC as +300 - 100 = +200.
8. Contractor retains balance as 1000 for labour provided.

5.2. Example Non-VAT Contractor:
1. Labour is 5 days at 200 per day = 1000 net plus no VAT = 1000 gross.
2. Hire expenses are 600 as 500 net plus 100 VAT.
3. Invoice is labour 1000 plus no VAT = 1000 and hire as 500 plus 100 = 600. Total is 1500 net plus 100 VAT = 1600.
4. Company pays the invoice as 1500 net plus 100 VAT = 1500.
5. Contractor income is 1600 as 1500 net plus 100 VAT.
6. Contractor outgoing is 600 as 500 net plus 100 VAT.
7. Contractor does not pay VAT to HMRC. Income VAT equals outgoing VAT with a zero balance.
8. Contractor retains balance as 1000 for labour provided.

5.3. Example:
1. VAT is a supply chain tax that has negligible impact on the contractor or the company.
2. All costs should be viewed and processed as NET with little concern for VAT as an extra that is paid to HMRC.
3. The contractor is paid with 7 day terms, that means 7 days after an invoice is issued and that is 14 days after the project began.   Contractors must have the means to survive for 14 days without any pay.
4. Expenses of 600 gross must has a VAT receipt to prove that the actual charge is 500 net plus 100 VAT because that 100 VAT is reclaimed by the company.   Expenses without a VAT receipt are 20% more expensive that expenses with a VAT receipt.
5. Services (labour) from a person who is not VAT registered will not contain a VAT charge to be reclaimed.

6. Expenses without VAT:
1. A few expenses are permitted and must have the correct cost code applied to show they do not have VAT.
2. Insurance does not have a VAT charge and the insurance tax part cannot be reclaimed like VAT.
3. Books and subscriptions are zero VAT rated without a VAT amount to be reclaimed.
4. Food and drink that is considered essential is zero rated VAT, but meals and luxury food (like orange juice) are standard VAT rated.

Wholly, Exclusively and Necessarily (WEN)

Personally Taxed Expenses: (not permitted)
1. Company vehicle, fuel, servicing, insurance.
2. Travel as commuting to and from the persons normal place of work.
3. Personal expenses like home utility bills that are not exclusively for business.
4. Entertainment, other than shareholders.
5. Transfer of assets, gifts.
6. Loan of money for any reason.
7. Mileage allowance over 45 pence per mile.
8. Expenses paid as a result of a salary sacrifice scheme.
9. Round sum subsistence as a per-diem regardless of the expense being paid.

Trivial Benefits: (exempt from tax)
1. Benefit is less than fifty pounds. Annual benefit is less than 300 pounds.
2. Benefit is NOT cash such as gift vouchers.
3. Benefit is NOT part of an employment contract.
4. Benefit is NOT in recognition for work done (bonus).
5. Free food in canteen when provided to ALL employees.
6. Annual staff party up to 150 pounds per person, including partners.
7. Flat rate of four pounds per week for working at home - to cover extra heat and light.

Optional Remuneration: (reported but not taxed)
1. Pension payments by company to recognised pension scheme.
2. Childcare vouchers when provided to ALL employees.
3. Cycle to work, bicycle safety equipment.
4. Ultra low emission vehicles (electric).

Document Control.
1. Document Title: Personal Expense Policy: UK HMRC Tax Allowances: 2019.
2. Description: Personal Expense Policy, policies and guidelines.
3. Keywords: Personal Expense Policy, policies and guidelines.
4. Privacy: Shared with approved people for the benefit of humanity.
5. Edition: 1.3.
6. Issued: 3 Jan 2019.