Employers have the option to pay their employees a bespoke scale rate expense payment to reimburse them for expenses incurred in the performance of their duties. A scale rate payment is designed to do no more than reimburse the employee’s allowable expenditure without the need for the employee to provide a receipt and make a formal expense claim. Scale rates are generally set at a fairly modest level.
Bespoke Scale rate expenses can be useful for when expenses are widely incurred, for broadly similar amounts, but for which it is difficult to get receipts e.g. subsistence or cleaning of uniforms and protective clothing.
From April 2009, employers have had the option of using the advisory benchmark scale rates for subsistence expenses, which were set by HMRC. Employers need to notify HMRC when they wish to use these rates. Where any scale rate is used, the employer is responsible for operating a suitable checking system to ensure that employees are actually incurring qualifying expenses.
If the employer wants to pay at a different rate, or pay a scale rate for a different type of expense, then they need to apply to HMRC with a proposal of a reasonable amount. It is likely HMRC will then ask them to undertake a sampling exercise over a fixed period of time to prove that the amount requested is not excessive.
HMRC has recently launched an online form that can be completed to apply for a bespoke scale rate which may simplify the application process. The form can be found here: http://tinyurl.com/j8twp3y
For further updates, please download our Tax e-news here
If you have any queries regarding expense claims or bespoke scale rate for expenses payments then please contact our expert Tax or Payroll teams, in one of our eight offices, across the South West, who will be happy to answer any questions you may have.