Expense Reimbursement policy in the United Kingdom



Modified on: Fri, 30 Jan, 2026 at 2:50 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)

Mileage claims must not exceed HMRC‑approved rates to remain tax‑free.

Employees must keep a detailed mileage log to support their claims. This should include:

  • Date of travel
  • Start and end postcodes
  • Purpose of the journey
  • Total business miles travelled

Accurate record‑keeping is essential, as commuting between home and a permanent workplace is not classed as business travel.


Company Car Business Mileage

Business miles driven in a company car are reimbursed using HMRC Advisory Fuel Rates (AFR) rather than the AMAP rates above.

  • AFRs vary by engine size and fuel type and are updated quarterly by HMRC.
  • These rates are intended to reimburse the fuel or electricity cost only, not vehicle wear and tear.

Electric Vehicles (EVs):
As of March 2025, the HMRC advisory rate for fully electric company cars is 5 pence per mile.

To avoid tax charges:

  • Employees must keep accurate logs showing date, destination, purpose, and mileage.
  • Only genuine business journeys qualify for tax‑free reimbursement.

If the employer pays for private fuel, a fuel benefit tax charge will usually apply.

Any private miles reimbursed by the company are treated as a taxable benefit.


Passenger Payments

When carrying colleagues on a business journey in a car or van, employees may claim:

  • Up to 5p per mile per passenger (tax‑free)

This applies only to business travel and must be supported by mileage records.


Parking and Tolls

  • Parking fees and tolls must be submitted as separate expense items
  • Receipts are required
  • These costs should not be included in mileage claims


Business Travel Rules

  • There is no statutory cap on business travel expenses.
  • Reimbursement must stay within HMRC‑approved rates to qualify for tax‑free treatment.


Transport Services (Non‑Mileage Travel)

Applies to:

  • Air
  • Bus
  • Train
  • Tram
  • Taxis
  • Rental cars

Requirements:

  • Valid receipts
  • Prior approval (where applicable)
  • Travel should be booked at the lowest practical fare or class (e.g. economy or standard)

First‑class travel is permitted only with clear business justification.


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