What is the tax-free overnight subsistence allowance which may be available to employed lorry drivers?
This is a freeview 'At a glance' guide to the tax-free overnight subsistence allowance which may be available to employed lorry drivers.
At a glance
Lorry drivers are entitled to receive a subsistence allowance when working away from home or their normal place of work.This will be tax-free if the employers pays or reimburses the lorry driver in an approved way and the following conditions are met.
- Condition A: The employer has a system in place to check that the employee is actually incurring the expenses and that a deduction is allowable in respect of those amounts.
- Condition B: It is not suspected that the employee had not incurred the expense or that a deduction would not be allowed. The payment will be made in an approved way if the employer either uses:
- HMRC's benchmarked scale rates.
- From 6 April 2019, employers are no longer required to have a system in place for checking employee expenses paid using benchmark scale rates.
- Employers are still required to ensure that employees are undertaking Qualifying travel in relation to the expenses being claimed.
- Its own Bespoke rates as pre-agreed with HMRC.
- Actual expenses as formally claimed by the employee.
- HMRC's benchmarked scale rates.
HMRC's benchmarked scale rate for lorry drivers is currently £34.90 per night.
- This allowance is not available to self-employed lorry drivers.
The cost of meals is included in the overnight rate.
- Employers should not also pay or reimburse the cost of these meals on either an ‘actuals’ basis or using the benchmark rates.
Lorries with sleeper cabs
Where the employee incurred the expenses as a result of having to spend the night away from home and their permanent workplace (if any), 75% of the allowance (£26.20) may be paid.
- An HMRC approval notice must be applied for by the employer.
- The employer must have a system in place to check that the employee was working away from their normal place of work or home and that they actually incurred the subsistence costs whilst working away.
- Employers can also agree their own Scale rate with HMRC.
Where the employer knows that the driver uses their sleeper cab, the amount paid free of tax should not exceed a reasonable reimbursement of:
- Evening meal and breakfast.
- Washing facilities.
- Upkeep of bedding in the cab.
Mid-day meals
Where the employer chooses to also pay for the driver's lunch this will not be taxable where both:
- The payment does not exceed £2.00 a day.
- The driver is obliged to take their lunch away from their home or their permanent workplace (if any).
A similar rule is also available for bus/coach drivers.
Useful guides on this topic
Subsistence (employees)
Can employees claim tax relief for subsistence? How do you make a claim?
Subsistence (employer's guide)
Subsistence is the tax term for food and drink. What can be claimed? What are the rules for employer intermediaries? How do claims affect VAT, NICs and Income Tax?
Travel (summary for employees)
What expenses can your employer reimburse? How might travel expenses affect Income Tax and National Insurance Contributions? What journeys are allowable for tax relief?
Travel (employer's guide)
How do employers apply the tax rules to travel costs? What is available for subsistence costs? What are the rules on home-to-work travel?
Exemption for paid and reimbursed expenses
What exemptions apply for paid and reimbursed employee expenses?
Scale rates, bespoke rates and fixed rate expenses
What expense allowances can be paid to employees? What are HMRC's scale rates and bespoke scale rates?
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