Per Diem

For 2025, the United Kingdom’s guidelines on per diem expenses and reimbursements for travel and subsistence are mainly focused on ensuring reasonable costs are incurred and properly documented. These expenses are generally allowable if they arise from performing business duties away from a regular place of work or home. They include reimbursement for meals, accommodation, and other related costs, provided the claims are reasonable and supported by itemized receipts.

For subsistence during business travel, the following ceiling limits apply:

• One meal (5 hours) – £5
• Two meals (10 hours) – £10
• Three meals (12 hours) – £15
• 24-hour period – £25

These expenses must be in addition to the employee’s normal expenditures. Meals provided during training or included with travel (such as on flights) are not eligible for claims. Similarly, alcohol is excluded from claims, and the “staying with friends or family” allowance is capped at £42 per night​ gov.uk

You can review further details on specific allowances and exceptions on official government sources like the UK Government’s website on travel and subsistence.

Mileage

In the UK, employees who use their personal vehicles for business travel can claim mileage allowances under the HMRC guidelines. The rates are tax-free if they adhere to the approved mileage rates set by HMRC, which cover costs such as fuel, wear and tear, and insurance.

For 2025, the standard rates are as follows:

• Car or van: 45p per mile for the first 10,000 miles, and 25p for each mile thereafter.
• Motorcycles: 24p per mile.
• Bicycles: 20p per mile.

Employers can reimburse employees at these rates, and the reimbursements will not be subject to income tax or National Insurance contributions. However, the employee must use their vehicle primarily for business purposes (and not for personal use). If the employee’s actual costs exceed these rates, they may be eligible for additional tax relief.

It is important for both employers and employees to keep accurate records of the mileage driven, including the purpose of the journey and the number of miles traveled, to ensure compliance. Digital records, such as mileage tracking apps, are acceptable as long as they maintain the integrity of the data​ gov.uk gov.uk

You can find detailed information in the gov.uk and the official HMRC guidelines on mileage rates.

Paperless

In the UK, paperless or digital record-keeping is subject to specific legal requirements that ensure digital records can be used as valid evidence for tax and other regulatory purposes.

1. HMRC Requirements: According to HMRC, businesses must retain records for at least six years, particularly for VAT purposes. While these records can be kept digitally, they must be accurate, complete, and easily accessible in case of a VAT inspection. If records are digitized, they must be stored in a format that prevents tampering, ensuring their integrity. HMRC does not require businesses to keep records on paper, so long as they meet these criteria​
   bainesjewitt.co.uk amagno.co.uk
2. Legal Admissibility: Digital records must be unaltered and authentic to hold legal value. If a business chooses to digitize paper records, the paper documents can be destroyed, provided they are accurately scanned and indexed. It is crucial to maintain proper systems for verifying the authenticity of digital records​
   amagno.co.uk
3. Standards for Digitization: Businesses must follow appropriate standards, such as the British Standard for digitization (BIP 0008), which provides guidelines for converting paper records into legally admissible electronic formats. This includes ensuring that scanned documents are legible, properly indexed, and stored securely​
   amagno.co.uk

In summary, UK businesses can adopt paperless systems for record-keeping as long as they follow HMRC’s guidelines for accuracy, accessibility, and security.

Meals, Benefits & Allowances

In the UK, business travel expenses, including meals, benefits, and allowances, are regulated under the Benchmark Scale Rates (BSR) and Overseas Scale Rates (OSR) system.

Key Points for 2025 Compliance:

1. Benchmark Scale Rates (BSR) for UK Travel:

• Employers can reimburse employees for meals and subsistence without requiring receipts if they use HMRC’s approved BSR.
• The rates are:
  • 5+ hours of travel: Up to £5
  • 10+ hours of travel: Up to £10
  • 15+ hours (including travel past 8 PM): Up to £25
• If an employer pays above these limits, the excess is taxable and subject to National Insurance contributions.

2. Overseas Scale Rates (OSR):

• These allow employers to pay or reimburse employees traveling internationally without requiring tax or National Insurance deductions.
• The rates vary depending on the country and city. For example, in Sydney, Australia:
  • 5+ hours: £57.50
  • 10+ hours: £147.50
  • 24-hour rate: £195 plus accommodation costs.
• Employers using OSR must ensure employees are on qualifying business travel but do not need to check receipts.

3. General Compliance Requirements:

• Employers must ensure expenses are for qualifying business travel.
• If bespoke expense rates are used, they must be agreed upon with HMRC.
• Expenses exceeding BSR or OSR limits are subject to tax and National Insurance.

For more details, you can check the official UK Government guidance on expenses​.

Sales tax rates

In the UK, the VAT (Value Added Tax) rates for business travel in 2025 are as follows:

• Standard VAT Rate: 20% – This applies to most goods and services, including hotels, meals at restaurants, and general business expenses.
• Reduced VAT Rate: 5% – Applies to certain items like domestic fuel and power, as well as some mobility aids.
• Zero VAT Rate (0%): Applies to specific items like newspapers, books, and passenger transport, including flights and train fares in most cases.

When businesses incur VAT on expenses during business travel in the UK, they may be eligible for VAT recovery, depending on the type of expense and their VAT registration status. Non-UK businesses may need to apply for a refund via the UK’s VAT refund scheme, provided they meet the necessary conditions.

VAT filings in the UK are typically done monthly or quarterly, with deadlines set at one month and seven days after the end of the reporting period. Late submissions and payments can result in penalties​ taxually.com hellotax.com