The dispensation system instead of the employee’s actual costs in certain circumstances allowed amounts based on scale rates to be paid or reimbursed. The scale rates are generally for travel and subsistence expenses. They consist of round sum allowable amounts for specific circumstances.
There were two key types of scale rates available for use by an employer:
- ‘benchmark’ rates
- ‘bespoke’ rates
As part of the changes, these options are still available as detailed below.
The benchmark rates
The benchmark rates are a set of maximum reimbursement rates for meals. These round sum amounts have now been included in Regulations. So, where relevant qualifying conditions are met, they can be used by employers for payment or reimbursement of employees’ expenses.
These rates apply only if the employee incurs expenditure in the course of ‘qualifying business travel’ as follows:
- one meal allowance per day paid in respect of one instance of qualifying travel, the amount of which does not exceed:
- £5 where the duration of the qualifying travel in that day is 5 hours or more
- £10 where the duration of the qualifying travel in that day is 10 hours or more, or
- £25 where the duration of the qualifying travel in that day is 15 hours or more and is on-going at 8pm or
- an additional meal allowance not exceeding £10 per day paid where a meal allowance a. or b. is paid and the qualifying travel in respect of which that allowance is paid is on-going at 8pm.
The bespoke rates
These are rates negotiated and specifically agreed with HMRC in writing. The business has to apply to HMRC, if it wants to pay bespoke rates for meals or other types of expense.
There are transitional arrangements for bespoke scale rates. This means that employers can continue to use any existing rates agreed since 6 April 2011. This till the fifth anniversary of that agreement subject to re-confirming information to HMRC.
If your company operates in Swanley, Bromley, Kent and London areas, Adiva Accountants in Swanley can advise you on the benchmark and bespoke scale rates. Please do not hesitate to contact us at Adiva Accountants in Swanley.