Anthony Tete

Imagine this; you’re a project manager heading to Edinburgh for an important business meeting. You’ve booked a train, lined up your hotel stay, and are preparing to grab meals on the go.  

These are all necessary expenses for your trip. But did you know that in the UK, you might be able to claim these costs back under what’s called a “subsistence allowance”?  

Whether you’re footing the bill yourself or your company is reimbursing you, it’s important to understand what qualifies as a legitimate business expense and how to claim it properly. 

Let’s get you ready for your next business trip by breaking down the key things you need to know about subsistence allowance in the UK. From what’s included to what’s not, and how to report a claim, we’ve got you covered—so you can focus on your work without worrying about out-of-pocket expenses. 

What is a subsistence allowance in the UK?

Subsistence allowance in the UK refers to expenses that employees can claim for costs incurred while traveling for work, such as meals, accommodation, and travel.  

HM Revenue and Customs (HMRC) allows these claims to cover necessary, business-related expenses, provided they meet specific guidelines and are not part of the employee’s regular, everyday costs. 

When can you claim subsistence allowance in the UK?

Let’s stick with the same example as before. As a project manager, your job involves travelling to meet clients across the UK.

One day, you have a meeting scheduled in Manchester, (your usual office is in Birmingham). To make it to your meeting on time, you catch an early train, grab breakfast on the go, and then later buy lunch while you’re in Manchester before heading back.

Now, can you claim these food expenses as a subsistence allowance? Yes, in this scenario, you likely can!

Here’s why:

1. The expense is necessary for your work duties: travelling to Manchester is part of your job responsibilities, so any reasonable costs incurred while doing this are necessary for work.
    
2. It’s an additional cost: if you hadn’t been travelling for work, you wouldn’t have had to spend extra money on breakfast and lunch in a different city. These are costs over and above your usual daily expenses.
    
3. You have receipts: always keep your receipts. Whether it’s a coffee shop receipt for breakfast or a restaurant bill for lunch, they’re essential to verify your claim.
    
4. You’re away from your usual place of work: since you’re not working from your Birmingham office and had to travel to Manchester, these expenses fall under the criteria of being away from your normal workplace.

It’s important to note that the costs you claim must be reasonable. For instance, a modest lunch in Manchester would be acceptable, but a lavish dinner at a high-end restaurant might raise eyebrows with HMRC.

Are there any exceptions? 

Yes. Here are some examples of situations where you might be exempt from claiming a subsistence allowance in the UK:

• When your employer provides meals (during the trip) 
• When the trip is for personal reasons (even if there’s a minor business component) 
• When the expenses are excessive 

The subsistence allowance rates in the UK 

Here are HMRC’s daily subsistence allowance rates in the UK for 2025:

Meal subsistence rates in the UK

Employee subsistence rate	Maximum limit
One meal (5 hour) ceiling	£5
Two meal (10 hour) ceiling	£10
Three meal (12 hour) ceiling	£15
24-hour ceiling	£25

Accommodation rates in the UK

Location	Maximum limit
London	£130
Bristol	£100
Warrington	£90
Reading	£85
All other locations (UK based)	£75

What about mileage rates? 

While your employees can’t claim back the actual hours they spend driving for work, they can claim mileage allowance to cover the costs of using their own vehicle. HMRC’s mileage allowance rates are designed to compensate for fuel, wear and tear, and other expenses, helping employees offset the costs of business travel.

Here are the approved mileage rates for 2025: 

Type of vehicle	10,000 miles	10,000 + miles
Cars and vans	45p	25p
Motorcycles	24p	24p
Bikes	20p	20p

The subsistence allowance rates outside the UK 

If you’re travelling abroad for work, HMRC provides subsistence rates in local currencies for different countries and cities. 

Here are some of the most popular destinations in 2025: 

Country	Expense	Rates
United States	Meals	$21 – $34.50
	Accommodation	$216 – $239
Canada	Meals	$38.50 – $47
	Accommodation	up to $224
European countries	Meals	€22 – €40
	Accommodation	averages €199.50
Singapore	Meals	SGD 91.50
	Accommodation	SGD 318
Hong Kong	Meals	HKD 292.50
	Accommodation	HKD 2376.50

How to report subsistence allowance spending to HMRC 

Reporting subsistence allowance to HMRC is fairly straightforward and follows the same process as reporting other work-related expenses.  

At the end of the tax year, you need to complete a P11D form for each employee who received reimbursements for expenses (like meal allowances). Additionally, a P11D(b) form may be required to summarise the total expenses and calculate any necessary Class 1A National Insurance contributions. 

It’s also worth noting that from April 2026, all benefits in kind (BIK)—except for loans and living accommodation—must be reported and taxed through payroll. Which means that you’ll no longer be able to process BIKs through P11Ds.  

To make sure everything runs smoothly, you should have a clear process in place for collecting, verifying, and recording your expenses.  

Say hello to Capture Expense 

Want to keep all your expenses, including subsistence allowance in the UK, organised and in one place?  

Book a demo with Capture Expense today and see how easy it is to submit, track, and manage your expenses—saving you time and keeping you compliant with HMRC. 

A travel expense policy is more than just a list of what your employees can or can’t spend money on, while on the road. 

With the right policy you can simplify your travel and expenses (T&E) reimbursement process, streamline workflows, and set clear spending limits. These are just some of the ways a robust policy can help. The list goes on and on. 

If you’re new to the T&E game, you’re in good hands. We’ll provide you with a clear description of what a travel expense policy is, our guidelines to bear in mind when creating a policy, and our free template to help you get started. 

What is a travel expense policy? 

A travel expense policy is a set of guidelines established by an organisation to regulate and manage costs incurred by employees during business-related travel. There’s no one-size-fits-all policy, because it needs to align with your organisation’s size, needs, and travel history. But a thorough T&E policy outlines:

Booking guidelines 

• Instructions on how, where, and when to book travel. 
• Approved travel management platforms or expense management apps that can handle travel expenses. 
• List of preferred suppliers for travel and accommodation.

Expense coverage

• Clear identification of reimbursable expenses (e.g., transportation, meals, and accommodation). 
• Specification of non-deductible expenses (to avoid confusion later down the line).

Spending limits

• Maximum allowable amounts for various expense categories, such as daily meal allowances or hotel rates.

Reimbursement process

• Step-by-step instructions for submitting expense claims, including required documentation (receipts, travel log etc.). 
• Expected timelines for reimbursement.

Payment methods

• Guidance on using corporate cards, cash advances, and out-of-pocket expenses.

Approval process

• Details of the approval hierarchy for travel requests and out-of-policy bookings.

Is there anything missing from your travel expense policy?

If you think your travel policy is missing something, then it probably is.

Ask yourself the following questions (and update your policy if you need to):

• Are there specific times when business travel isn’t allowed, such as during an audit or public holidays?
• What steps will be taken to deal with non-compliance with the policy?
• What guidelines should be in place if someone wants to extend their business trip for personal leave?
• How will the team handle unexpected events, like Acts of God or emergencies? Do employees know who to contact for help?
• Who’s responsible for keeping the travel policy up to date? How often should it be reviewed? 

Not sure whether you need a travel expense policy? 

From the moment you authorise your first business trip, you’ll need a travel expense policy. You should’ve had one in place before that first trip was even booked—but you get the idea. 

Ultimately, the choice is yours. However, after hearing countless stories of business trip mishaps, we’ve concluded that when it comes to travel expenses, what can go wrong, will probably go wrong.   

Here are just some of the things you expose yourself to when you don’t have a travel expense policy: 

• Overspending due to hidden costs that slip through the cracks.
• Late or incomplete expense claims, when employees aren’t clear on the guidelines—or forget to follow them.
• An increase in fraudulent claims, including duplications, exaggerations, and misreporting of expenses, which can go unnoticed without clear rules in place.
• A lack of insights into your company’s spending trends, since without a standard way of tracking and storing expenses, it’s hard to analyse and control your costs effectively. 

5 guidelines to keep in mind when creating your travel expense policy 

1. Involve key stakeholders

Your travel expense policy will touch nearly every employee and department within your organisation. That’s why it’s important to bring different perspectives and expertise to the table from the very beginning.

You need to make sure you get input from your:  

• Finance teams: as they’ll make sure the policy aligns with your budget and compliance requirements.
• HR department: they can provide insight into employee needs and expectations.
• Travel department: they can highlight logistical challenges and suggest practical solutions.

2. Consider employee satisfaction

At the end of the day, your employees are the ones who will be following your travel expense policy. If the policy feels too restrictive or confusing, it can lead to frustration, delays in submitting expenses, and lower morale.  
 
A policy that takes your employees’ needs into account—like allowing some flexibility for reasonable expenses—shows that you value their comfort and judgment. 
 
Don’t forget, happy employees are more likely to stick to the rules.

3. Incorporate an understanding of duty of care

Duty of care is all about looking out for your employees’ safety and well-being while they’re travelling for work.  

Business trips can come with unexpected risks—flight cancellations, unsafe accommodations, or emergencies—and your travel expense policy should reflect that you’re prepared to support your employees when it matters most.

A good policy should give clear advice on anticipating, preventing, and responding to potential issues that might arise while employees are on the move.

The goal is to minimise risks by recognising and preparing for them in advance. And if something does go wrong, your policy will outline practical solutions to manage the situation. 

4. Provide easily accessibly resources 

A well-crafted policy goes beyond listing the dos and don’ts. You should consider including the following resources: 

• The policy document: a clear, detailed copy of the travel expense policy, ideally available in both digital and printable formats for easy reference.
• Expense claim forms: standardised forms for submitting expenses, whether in digital or printable formats, along with instructions on how to fill them out.
• Reimbursement process overview: a step-by-step guide explaining how to submit claims, what documentation is required, and how long reimbursements typically take.
• Approved vendor list: a list of preferred airlines, hotels, car rental companies, and other vendors.
• Contact information: details of who to reach out to with questions or for assistance, such as the finance or travel management team.
• Training materials: videos, presentations, or workshops explaining the policy and providing examples of how to follow it correctly.
• Expense tracking tools: links or instructions for accessing company-approved expense management software for tracking expenses during trips.
• Policy updates notifications: a process or platform where employees can check for updates to the policy to make sure they’re always informed of the latest guidelines. 

5. Practice continuous improvement

Regularly updating and improving your travel expense policy is crucial because things change—whether it’s new technologies, shifts in industry standards, or changes in your company’s needs.  
 
By keeping your policy up to date, you can make sure it stays relevant and effective.  
 
Plus, it gives you the chance to address any issues that have come up, refine areas that might be causing confusion, and adapt to new challenges.  

Capture Expense is here to  support  you every step of the way 

We know that creating a travel policy from scratch takes time, and it can be overwhelming at first. To help you get started you can download our free travel expense policy template.
 
Or, if you want to see how we can streamline your entire T&E process, book a demo here. 

There’s nothing quite like a business trip. Exploring new cities, meeting interesting people, and learning new things. It’s a great way to break up the monotony of the daily grind and add some excitement to your work life. 

But let’s be honest. Nothing quite kills that refreshed, post-trip feeling like coming home to the task of filing a travel expense report. All those receipts, mileage logs, and itemised lists can feel tedious. Necessary? Absolutely. Exciting? Not so much. It’s the paperwork price you pay for all those moments of professional adventure. 

What if we told you that you could manage all your travel and expenses (T&E) in a matter of minutes? What if we told you the whole process could be fully digitised and automated?

Now that we’ve got your attention. Let’s look at what T&E means, some key examples and how you can streamline your entire travel and expense management process.  

What does T&E mean?

T&E refers to the costs incurred by employees or individuals when traveling for business purposes. These expenses typically include transportation, accommodation, meals, and other incidental costs necessary to carry out their work-related duties while away from their usual workplace. 

T&E examples

There’s a lot that can fall under the umbrella of T&E. Let’s break it down:

Transportation 

This includes the big things, like booking flights, train tickets, or renting a car to get to your destination. It also covers smaller, day-to-day transport expenses like taxi rides, parking fees, or public transport passes if you’re getting around in a city.

Accommodation

Your stay is a key part of the budget, whether it’s a hotel, serviced apartment, or Airbnb. Beyond the nightly rate, it might also include any Wi-Fi fees or charges for using business facilities, like meeting rooms—make sure you make it clear in your T&E policy whether this will be included, or comes at the employees own cost.

Meals

Everyone’s got to eat, right? This includes dining out at restaurants, grabbing a quick bite at a café, or ordering room service. Don’t forget about snacks and drinks during the day or those team dinners that turn into great networking opportunities. There’d usually be a set spend limit on how much an employee can claim depending on length of their trip and what meal of the day it is; so make sure this is totally clear before you go out for that gourmet, 3-course meal.

A real-world example

Imagine you’re a sales rep for a tech company. You’re scheduled to fly to San Francisco for a big three-day conference. You book your flight, reserve a hotel room, and rent a car to get around the city. While you’re there, you’ll need to cover the cost of meals and any additional transportation expenses.  
 
All of these costs combined would be considered T&E expenses. 

6 T&E challenges and how to solve them

Manual processes 

Processing your travel and expenses manually might seem manageable at first, but it quickly becomes a bottleneck as your business grows. Manual processes are time-consuming, prone to errors, and can lead to your finance teams spending excessive time reviewing claims.

The solution: you should consider automating your entire travel and expense process with a sophisticated expense management system like Capture Expense. It will help you streamline everything from receipt capture and expense submission to policy enforcement and approval workflows—saving time and providing greater control over your expenses. 

Policy non-compliance 

This is a major challenge in managing your travel and expenses because it can lead to overspending and inconsistent claims for your business. Sometimes your employees may not fully understand the policies, or they might accidentally—or even deliberately—submit claims that don’t align with company guidelines.  

So, if you’re wondering whether you need a corporate travel policy. The answer is yes. A robust T&E expense policy is like a roadmap for your business trips. It sets clear guidelines on what expenses are reimbursable, how much you can spend, and what kind of documentation is required.

To help you get started, you can download our free corporate travel policy template. 

Lost receipts 

When it comes to T&E expenses, lost receipts are a huge headache for everyone involved. Your employees can’t claim reimbursements without proof of purchase, your finance teams can’t process the expense, and your managers end up chasing people for missing details.

So, why does this happen so often? Think about it—when you’re traveling, you’re juggling trains, meetings, meals, and taxis. Receipts get crumpled, misplaced, or accidentally tossed out. If you’re relying on manual systems, the problem only gets worse because there’s no backup unless someone took the time to snap a photo or make a note.

The solution? Whether you’re handling finances manually or digitally, it starts with making it easy to capture receipts right away. If you’re sticking to a manual process, encourage your employees to use their phones to take pictures of receipts the moment they get them. For a truly effective solution, though, modern expense management apps are the way to go. They let your employees snap, upload, and categorise receipts in seconds, even while they’re on the move. The data is automatically synced to your accounting system, so there’s no risk of losing it—and no more chasing people for missing paperwork. 

Budget overspending 

Overspending can spiral out of control fast. A little extra here for a last-minute hotel upgrade or an unplanned meal there might seem harmless, but multiply that across dozens of employees and trips, and you’ve got a major dent in your budget.

The problem usually comes down to a lack of visibility and control (but more on that later). If your employees don’t have clear spending limits or real-time guidance on what’s allowed, they might unintentionally exceed budgets. And if your finance teams only see expenses after the trip is over, it’s too late to fix the problem.

The way to deal with budget overspending is proactive planning and real-time oversight. Start by setting clear budgets and policies for travel expenses, so your employees know exactly what’s acceptable.  

Consider bringing in a tool that helps enforce those guidelines in real time. Robust expense management platforms can flag out-of-policy spending instantly, give your employees budget updates on the go, and even alert your managers if someone’s about to exceed limits.

This way, you’re not just reacting to overspending—you’re preventing it before it happens. 

Delayed reimbursements 

Imagine spending your own money on a work trip—flights, meals, taxis—only to wait weeks or even months to get it back. It’s frustrating, especially if the expenses were significant.

For your finance teams, delayed reimbursements are a sign of inefficiency. Processing piles of expense reports, chasing missing receipts, and manually checking for policy compliance takes forever. The longer it takes, the harder it is to manage cash flow and keep your employees happy. 

So, what’s the answer? It all comes down to speed and automation. An expense management system can simplify your entire process. Employees can submit expenses in real time—by snapping a photo of a receipt—and finance teams get all the data they need in one place.  

Poor visibility into spending patterns 

Think about trying to manage all your company’s finances with a pen and paper. It’d be a lot of work, and easy to make mistakes. That’s kind of what it’s like using manual spreadsheets or legacy software for your T&E expense reports.

These outdated methods can’t automatically check if your expenses are within policy limits or if you’ve got the right receipts. It’s all up to you to do the calculations and spot any errors. And let’s be honest, human error is inevitable.

You’re in luck because the solution here, is the same one as all the others: a modern, fully automated expense management system. Tools like Capture Expense can automatically categorise expenses, flag policy violations, and generate accurate reports in real time.  

Are you looking for a platform that can streamline your entire T&E process?

With just a few taps, you can capture receipts, automate employee reimbursements, and manage everything else with ease. Book a demo today and see how we can help streamline your entire T&E process.

Having a corporate credit card is great. You can tap away, and purchases are charged directly to your company’s account.  

But sometimes — especially if you run a smaller business — you won’t have corporate cards, and in that case, you’ll have to pay for business expenses yourself (or “out-of-pocket”). 

The downside of paying for things out of pocket (besides the obvious) is that the logging, tracking and reimbursing of these costs can be time consuming.

That’s why you need to have a good system in place, so all these little expenses don’t turn into big headaches down the line.

Let’s start with a definition for out-of-pocket expenses and work our way to successfully managing them.

What are out-of-pocket expenses?

Out-of-pocket expenses are costs you pay yourself for work-related activities. Think of them as money you spend upfront, often with the expectation of being reimbursed later.

Common examples of out-of-pocket expenses

Here are some common examples of out-of-pocket expenses:

• Work-related travel costs: like paying for fuel, parking, or tolls during a business trip.
• Meals: grabbing lunch or dinner for a client, or while travelling for work.
• Office supplies: picking up stationary, notebooks, or other essentials when your company runs out.
• Accommodation: costs for hotel stays or other forms of accommodation during business trips.

Basically, it’s anything you pay for upfront that someone else is supposed to cover later! That’s right, the examples are endless. 

Let’s look at a real-world scenario

Imagine you’re travelling for a work conference in another city. Your company’s travel department has booked your flight and hotel, but when you arrive at the airport, you realise you’ll need to take a taxi to the hotel. You pull out your wallet and pay for the ride yourself since it’s not prepaid.

Later, you keep the receipt and submit it to the travel department for reimbursement. That taxi fare is an out-of-pocket expense because you paid for it upfront, even though it’s technically a business expense. 

How to manage out–of–pocket expenses

First things first, you need to ask yourself whether you plan on managing your out-of-pocket expenses digitally or manually. There are pros and cons to each method (which we’ll cover shortly) but generally if you can digitise any part of your workflow, it’s usually worth doing.

Digital vs manual: how should you manage your out–of–pocket expenses?

 

Managing your out–of–pocket expenses digitally

Pros	Cons
Convenience: you can track your expenses on the go with just a few taps on your phone. No need to carry around notebooks or receipts.	Costs: while many apps are free, some of the more advanced features or premium versions come with subscription fees.
Organisation: digital tools often categorise expenses automatically (e.g., meals, travel), making it easier to understand where your money is going.	Learning curve: some apps can be tricky to set up or use, especially if you’re not tech-savvy.
Accuracy: you’re less likely to forget an expense since you can log it in real time. Plus, the calculations are automated, so no human errors.	Potential for overcomplication: if you’re not careful, you might end up spending more time fiddling with the app than actually managing your finances effectively.
Access to insights: many apps provide spending trends, budgeting tools, or even advice to help you save money.
Eco-friendly: less reliance on paper receipts or physical records is better for the environment — which is always a bonus.

Managing your out–of–pocket expenses manually

Pros	Cons
No tech needed: no need for apps, phones, or internet. A pen and notebook (or even receipts in an envelope) are all you need.	Time-consuming: let’s face it—tracking everything by hand can be a bit tedious, especially if you have a lot of small transactions.
Simplicity: for some, writing things down feels more straightforward than navigating through digital menus and options.	Prone to errors: it’s easier to miscalculate or forget to log an expense if you’re doing it manually.
Mindful spending: the act of writing each expense down can make you more conscious of your spending habits.	No automated insights: you miss out on features like expense categorisation, or spending trends that digital tools provide effortlessly.
	Not portable: carrying a notebook everywhere can be inconvenient compared to using a smart device.

Let’s look at the steps you need to take to manage your out-of-pocket expenses effectively:

Step 1: Record your out-of-pocket expenses as soon as they happen

Don’t let your receipts stack up—it’s a disaster waiting to happen.

If you’re using a sophisticated expense management platform like Capture Expense, all you have to do is snap a photo of your receipt, and let the software do the heavy lifting for you. It’ll extract all the necessary details and send them straight to your accounting system.

Prefer manual entry? That’s okay too! Just make it a habit to jot down expenses as soon as you can—whether in a notebook or spreadsheet. 

If immediate logging isn’t realistic (even if it’s just a case of taking a quick picture), set a weekly or monthly calendar reminder to process your expenses.

Step 2: Categorise your business expenses

Categorising your business expenses is key. Think of it like sorting your clothes into different drawers. You wouldn’t just throw everything into one pile, right?

Here’s how to categorise your expenses:

1. Create a system: divide your expenses into different categories that are specific to your industry and the way you do things. 
2. Stay consistent: once you’ve established your categories, stick to them. This will make it easier to track your spending and identify trends. 
3. Use software to automate the entire process: while some providers offer this service, Capture Expense’s AI-powered matching feature is a game-changer when it comes to categorising your expenses. Whenever you upload receipts, or process corporate card transactions in the app, it automatically assigns the correct expense category.  

Some common examples of business expense categories

Here are some of the most common business expense categories. Pick and choose which ones you think will be a good fit for your specific company:

• Travel    
• Meals and entertainment 
• Advertising and marketing  
• Office supplies   
• Utilities   
• Employee benefits    
• Training and development  

Step 3: Keep track of all your receipts 

Don’t let your receipts slip through the cracks! Whether it’s a physical receipt or a digital one, make sure to keep them safe.

They’re your proof of purchase and are crucial for:

• Reimbursements: if you’ve paid out of pocket, the receipt is what you’ll use to get your money back.
• Tax time: if you’re deducting business expenses, HMRC might ask to see proof. Without receipts, you could lose out on valid deductions.
• Audits: no one likes the word, but audits happen. Keeping receipts guarantees you’ve got all your ducks in a row if your finances are ever questioned. 

Step 4: Consider prepaid or company credit cards

Let’s talk about why prepaid or company credit cards can be a game-changer for managing out-of-pocket expenses.

Here’s the thing: paying for work-related stuff with your own money can get messy. You’re dipping into your personal funds, trying to remember what needs reimbursement, and it can take forever to reconcile everything. That’s where prepaid or company credit cards come in. 

Here are 4 reasons why you should consider them:

No more out-of-pocket spending

Imagine this, instead of paying for that client lunch or travel ticket from your own pocket, you just use the company card. No personal funds are involved, so there’s no waiting around for reimbursement.

Better cash flow management

Prepaid cards, in particular, let you load a set amount of money each month. It’s like giving yourself or your employees a spending allowance that’s easy to track. Plus, since it’s prepaid, there’s no risk of overspending.

Simpler tracking

Every transaction on the card is automatically recorded. You can pull up the statements to see exactly what’s been spent and where—no more hunting through receipts or cross-referencing expenses with personal accounts.

Reduces admin burden

If you’re managing a team, prepaid or company credit cards eliminate the need for employees to pay out of pocket and then submit reimbursement forms. It streamlines the whole process.

For example

Say you run a small business and one of your employees needs to buy materials for a project. If they use their own money, they’ll need to file an expense claim, provide receipts, and wait for reimbursement—meanwhile, you’re stuck processing all of it. 

Now, if they have a prepaid card loaded with £500 for project expenses, they can use that directly. No personal money involved, no reimbursement headaches, and you’ve already capped how much they can spend. 

Things to watch out for

• For prepaid cards: make sure you top them up as needed and monitor balances to avoid any “insufficient funds” hiccups.
• For credit cards: pay the balance in full each month to avoid interest charges. And if multiple employees are using them, set clear spending guidelines to prevent misuse. 

Step 5: Review your out-of-pocket expenses  

Reviewing your out-of-pocket expenses regularly is like giving your finances a quick health check—it helps you stay on top of things and avoid surprises. 

Catch forgotten expenses 

It’s easy to forget small things like a coffee for a client meeting or a parking fee. When you sit down regularly (say, once a month), you can check receipts, bank statements, or your expense management app to make sure nothing’s been missed. 

Spot patterns in spending

When you review expenses, you start to see where your money’s going. Are you spending more than expected on travel? Is your coffee budget out of control? Regular reviews let you spot trends and decide if adjustments are needed. 

Stay prepared for taxes or audits

Keeping everything up to date means that when tax season rolls around (or if there’s ever an audit), you’ve got your expenses clearly documented. No scrambling for receipts or trying to remember what that £30 charge was for six months ago. 

Are you on the lookout for an app that can simplify and automate your out-of-pocket expenses?

If managing out-of-pocket expenses feels like a chore, Capture Expense is here to change that. With our app, you can snap receipts, categorise expenses, and let the automation handle the rest—no more manual logging or misplaced receipts.

Book a demo today to see how we can save you time, simplify your process, and give you back control of your finances.  

 

Did you know 43% of senior finance leaders are very concerned about HMRC inspections? 

That means that nearly half of all CFOs, Finance Directors, and Heads of Finance feel apprehensive or underprepared for an unexpected visit from the taxman. 

And maybe that’s partly because expense compliance in the UK is complex, and can be time-consuming. But the trick is having a robust policy in place to make staying compliant just that little bit easier.

Now before you can create your company expense policy, and implement processes for complying with HMRC, you need to know what’s expected of you.

Let’s shine some light on some of the main areas to focus on to make sure you keep the taxman at bay. 

What do HMRC expect from you?

If you have an HMRC compliance check, they’ll review your entire expense compliance process for non-compliance with HMRC expense regulations.  
 
Their primary focus is to make sure that you have:  
 
• A clear and enforced policy  
• Appropriate approval processes  
• Comprehensive documentation  
• Appropriate checks and controls  
• Full compliance with Tax and VAT requirements  
• A robust and secure payment process

The VAT rates in the UK

VAT (or Value Added Tax) is a tax added to the price of most goods and services in the UK.

If you’re a business owner, you’ll need to register for VAT if your taxable turnover exceeds £90,000 in a 12-month period. 

Once registered, you’ll charge VAT on your sales and reclaim the VAT you’ve paid on your purchases.  

Here are the VAT rates for 2024: 

	% of VAT	What the rate applies to
Standard rate	20	Most goods and services
Reduced rate	5	Some goods and services, e.g. children’s car seats and home energy
Zero rate	0	Zero-rated goods and services, e.g. most food and children’s clothes

 When you mustn’t charge VAT

There are certain goods and services that are exempt from VAT. This means you won’t charge VAT on these items — even if you’re VAT-registered.

Some examples of VAT-exempt items include:

• Financial services: banking, insurance, investments. 
• Healthcare and medical treatments: doctor’s visits, prescriptions. 
• Education and training: school fees, university tuition. 
• Charity services: charitable donations, fundraising events. 

You can also access HMRC’s full list of VAT exempt goods. 

Remember, even though you don’t charge VAT on these items, you still need to keep track of them in your business records. 

Expense compliance when it comes to vehicle mileage 

Did you know that your employees can claim back time spent traveling for work? 

That’s right, by following HMRC’s mileage rates, you can empower your employees to claim back vehicle expenses incurred for business purposes.

Here are the mileage allowance rates for 2024:

Type of vehicle	10,000 miles	10,000 + miles
Cars and vans	45p	25p
Motorcycles	24p	24p
Bikes	20p	20p

 What are HMRC’s advisory fuel rates?

HMRC’s advisory fuel rates apply to company-owned cars and serve two main purposes:

1. Reimbursing your employees for business travel expenses incurred in a company car.  
2. Managing reimbursements when your employees use a company car for personal travel and need to repay the business.  

Here are the advisory fuel rates for 2024:

Petrol

Engine size (cc)	Mean MPG	Fuel price (per litre)	Fuel price (per gallon)	Rate per mile	Advisory fuel rate
Up to 1400	51.0	143.4 pence	652.0 pence	12.8 pence	13 pence
1401 to 2000	42.3	143.4 pence	652.0 pence	15.4 pence	15 pence
Over 2000	27.1	143.4 pence	652.0 pence	24.1 pence	24 pence

Diesel

Engine size (cc)	Mean MPG	Fuel price (per litre)	Fuel price (per gallon)	Rate per mile	Advisory fuel rate
Up to 1600	56.9	149.1 pence	677.8 pence	11.9 pence	12 pence
1601 to 2000	49.3	149.1 pence	677.8 pence	13.8 pence	14 pence
Over 2000	38.0	149.1 pence	677.8 pence	17.8 pence	18 pence

 LPG (Liquefied Petroleum Gas) 

Engine size (cc)	Mean MPG	Fuel price (per litre)	Fuel price (per gallon)	Rate per mile	Advisory fuel rate
Up to 1400	40.8	98.3 pence	446.9 pence	10.9 pence	11 pence
1401 to 2000	33.8	98.3 pence	446.9 pence	13.2 pence	13 pence
Over 2000	21.7	98.3 pence	446.9 pence	20.6 pence	21 pence

 Electric

Electrical efficiency — miles per kilowatt-hour	Domestic electricity cost (per kilowatt-hour)	Rate per mile	Advisory electric rate
3.59	26.42 pence	7.36 pence	7 pence

 How to reclaim VAT on fuel

If you’re VAT-registered, you can often reclaim the VAT you’ve paid on fuel costs.

However, there are a few conditions:

• Business use: the fuel must be used for business purposes. This could be for company vehicles or employee reimbursements for business mileage.
• Accurate records: you’ll need to keep detailed records of your fuel purchases, including receipts and mileage logs. 

There are two ways you can reclaim VAT on fuel:

1. Reclaim all the VAT paid on fuel purchases and pay the appropriate fuel scale charge for your vehicle.  
2. Claim VAT only for the fuel used during business trips by maintaining thorough mileage records to demonstrate usage exclusively for business purposes.  

Expense compliance around carbon reporting

From July 2025, you’ll be required to provide more detailed information about your sustainability practices and climate related risks. 

This means if your business meets certain criteria, such as having a significant turnover (exceeding £500 million) and employee count (at least 500), you’ll be required to report on your carbon emissions.

You’ll need to:

• Track your carbon footprint: monitor your direct emissions (Scope 1) and indirect emissions from purchased energy (Scope 2).
• Assess your supply chain: evaluate the carbon footprint of your suppliers and consider ways to reduce emissions throughout your supply chain (Scope 3).
• Set reduction targets: establish clear targets for reducing your carbon emissions and develop a plan to achieve them. 

What you need to know about tax compliance 

When it comes to tax compliance, we know the number one question on your mind: are reimbursed expenses taxable in the UK? 
 
The short answer is no. If expenses are wholly, exclusively, and necessarily incurred in the performance of your job, they aren’t taxable. 
 
For example, if you’re a salesperson and your job requires you to travel to meet with clients. Any expenses you incur, such as travel costs, accommodation, and meal expenses, can usually be reimbursed tax-free. 

Are there any exceptions? 

Yes, if the expenses aren’t classed as “work-related”, or if they’re seen as providing a personal benefit. 
 
Here are a couple of examples:   

• Excessive or extravagant expenses: if your expenses are deemed unreasonable or excessive, they may be considered taxable income.  
• Personal expenses: reimbursements for personal expenses, such as commuting to and from work, are generally taxable. 

We know it can be tricky, but knowing the difference between deductible and non-deductible expenses can significantly impact your financial planning and tax liability.  

What you need to know about corporation tax

If you’re setting up a limited company in the UK, you’ll need to register for corporation tax within three months of starting your business.

This tax is applied to your company’s profits, investments, and any gains from selling assets.

Here’s a breakdown of the 2024 rates:

• Small profits rate (companies with profits under £50,000): 19%
• Main rate (companies with profits over £250,000): 25%

What you need to know about National Insurance Contributions   

National Insurance Contributions (NICs) are essentially taxes on earnings that help fund state benefits like the NHS and State Pension.  
 
If you’re a business owner in the UK, you’ll need to understand the different types of NICs and how they apply to your business:

Class 1 NICs

• Employee NICs: deducted from your employees’ wages. 
• Employer NICs: paid by you, on top of your employees’ wages.

Class 1A NICs

Class 1A NICs are a type of tax that you pay on certain benefits you provide to your employees.

These benefits, often called “Benefits in Kind (BIK)” can include things like:   

• Company cars: if you provide your employees with company cars, you’ll need to pay Class 1A NICs on the benefit value of the car.  
• Private healthcare: if you offer private health insurance to your employees, you’ll also need to pay Class 1A NICs on the cost of the insurance.  
• Accommodation: if you provide accommodation for your employees, such as a company flat or house, you’ll need to pay Class 1A NICs on the benefit value of the accommodation. 

Why you need to create an expense policy 

A company expense policy is like a roadmap to expense compliance. It outlines what expenses are reimbursable, how much you can claim, and what documentation you need to provide (for your company or HMRC).

By having a clear and concise policy in place, you can make sure that your employees understand the rules and submit accurate expense claims. 

To help you get started you can download our free expense policy template. 

How to report your expense reimbursements to HMRC

You have a couple of options to choose from when reporting the reimbursement of expenses: 

• You can use a P11D form to report your expenses and benefits to HMRC at the end of the tax year. 
• You can opt for payrolling, where you include the value of the expenses and benefits in the employee’s pay.  

It’s worth noting that starting from April 2026, all BIKs that you provide (except for loans and living accommodation) will have to be reported and taxed through payroll.

Your 6-step guide to HMRC expense compliance

1. Understand the rules

• Familiarise yourself with HMRC’s guidelines on allowable expenses. 
• Stay updated: keep an eye on any changes to tax laws and regulations.

2. Keep detailed records

• Keep all receipts for expenses — no matter how small. 
• Maintain a mileage log: if you use your car for business, keep a detailed record of your mileage. 
• Document the business purpose: explain why each expense was necessary for your job.

3. Categorise your expenses

• Clearly distinguish between expenses incurred for business purposes and those for personal use. 
• Use appropriate expense categories (e.g., travel, accommodation, meals, office supplies).

4. Claim the right amount

• Make sure that your expense claims are in line with HMRC’s rules and regulations. 
• Only claim for reasonable and necessary expenses.

5. Submit your claims on time

• Follow your company’s specific procedures for submitting expense claims. 
• Don’t delay in submitting your claims to avoid potential issues. 

6. Choose an expense management system that fully complies with HMRC

A sophisticated expense management system like Capture Expense will help you automate the process, reduce errors, and comply with HMRC regulations.  

You need to Look for a system that can: 

• Automatically calculate mileage claims based on HMRC rates 
• Generate accurate expense reports 
• Integrate with your accounting software 
• Provide real-time insights into your spending habits 
• Offer robust audit trails for expense compliance purposes 

Do you still need help with expense compliance?

Book a personalised demo today and we’ll help you with all your expense compliance needs. There’s not a mileage query we can’t handle, or a tax problem we can’t solve.

When it comes to running a business there are some areas where you have zero wiggle room: paying your invoices, your staff, and your taxes.

Now if you’ve had a strong quarter and are sitting on a healthy cash surplus, you might consider allocating funds towards discretionary expenses. This could include upgrading your software, improving your marketing efforts, or offering additional employee benefits—expenditures that, while not essential, can drive growth and improve long-term business performance.

Let’s take a look at what exactly is discretionary expenditure, some key examples, and how you can effectively manage it.

What is discretionary expenditure?

Discretionary expenses are costs that aren’t essential for keeping your business afloat.

They’re flexible expenses that can be adjusted, or removed entirely, without affecting your core operations. They often vary by department, such as marketing, HR, or sales ops, and include things like extra employee perks, business entertainment expenses, or mileage reimbursement. 

…basically, it’s a fancy way of saying non-essential expenses. 

What’s the difference between discretionary expenditure and non-discretionary expenditure? 

It’s pretty simple, with discretionary spending you can be creative, open-minded, and even impulsive. With non-discretionary expenditure, not so much. 

Examples of discretionary expenditure

As you know by now, discretionary expenditure is essentially spending that isn’t strictly necessary for your business to function.

If your business were a cupcake, then discretionary expenses are like the extra sprinkles that go on top– they make things sweeter, but aren’t essential. 

Let’s take a look at some examples: 

Marketing and advertising

Think of this as the cupcake’s frosting. It’s how you get people to notice and want to buy your products or services. This could include things like social media ads, TV commercials, or sponsoring events. 

Employee perks

These are like the sprinkles on the frosting. They make work-life more enjoyable for your employees and can help attract and retain top talent. Examples include company outings, gym memberships, or offering flexible working. 

Travel

This is like the cupcake’s base and it’s important for business growth. It could involve attending conferences, visiting clients, or expanding into new markets. 

Employee training and development

Think of this as the cupcake’s filling, it makes the business stronger and more efficient. It could include sending your employees on courses, workshops, or webinars.

Office improvements

These are like upgrading the cupcake’s stand, they make your business look better and feel more professional. It could involve renovating the office, buying new furniture, or upgrading technology. 

How to manage your discretionary expenditure

When you first start a business, every payment, every extra pound runs through the founder or the CEO, and they more or less know where the money is going. But as you take on more employees and grow, this is no longer possible. 

As discretionary costs will always be different from one quarter to the next, it’s vital to have a clear system in place to keep track and manage them, the best you can.  

Here are some of our top recommendations for managing discretionary expenses:

Outline a clear budget

Just like planning a vacation, having a budget for discretionary spending helps you stay on track. Decide how much you can afford to spend each month and stick to it.

Negotiate with your suppliers

Don’t be afraid to haggle! You might be able to get a better deal on things like subscriptions, gym memberships, tickets, insurance plans, utilities, or even phone and internet contracts. 

Regularly review your spending

Take a look at your spending habits every month and ask yourself: are there areas where you can cut back? Maybe you’re spending too much on corporate lunches or office parties.

Prioritise your discretionary expenses

To use a non-cupcake analogy, think of your discretionary expenses as toppings on a pizza. You want to pick the ones you love most, right? So, when it comes to spending your extra money, make sure you’re getting the most out of it.

Get a petty cash box

Starting a petty cash box can be a great way to manage smaller discretionary expenses. It’s like having a little stash of cash on hand for those unexpected costs that pop up.

Encourage cost-saving measures

Look for ways to save money on your discretionary expenses. This could mean finding cheaper alternatives, buying in bulk, or using coupons.

Track all your discretionary expenditure in granular detail

Stay on top of your spend and keep all your discretionary and non-discretionary expenses in one place with our sophisticated expense management platform Capture Expense.

Book a demo today to see how we can help.   

Regardless of the size of your business, you need to keep on top of your corporate card spend. 
If you’re interested in learning how to do a credit card reconciliation, you’ve come to the right place.

What is credit card reconciliation? 

Credit card reconciliation is the process of comparing your credit card statements to your internal records to make sure that all transactions are accurate and accounted for. It’s a crucial step in maintaining financial control and preventing expense fraud. 

What are the two types of credit card reconciliation?

Credit card statement reconciliation for company expenses

This type deals with expenses incurred by your company using its credit cards. The aim is to make sure that all recorded expenses in your financial books match the charges on the credit card statements.

The benefits

• Makes sure your financial statements reflect true business activity. 
• Helps in budgeting and planning financial activities. 
• Detects unusual or fraudulent transactions. 

For example

Imagine you run a mid-sized tech company. At the end of every month, your finance team receives credit card statements from your bank. They compare these statements with your internal expense records to make sure everything matches up. One month, they notice a charge for a luxury hotel stay in London that wasn’t logged in your records. Upon investigation, they find it was a fraudulent charge and promptly report it to the credit card issuer for resolution. This proactive reconciliation saved your company from an unauthorised expense. 

Credit card merchant service reconciliation for customer payments

Credit card merchant service reconciliation involves managing the income side of a business’s financial activities. This process makes sure that all customer payments made via credit cards are accurately reflected in the company’s financial system.

The benefits

• Makes sure all sales and income are correctly recorded in financial statements. 
• Provides accurate information on the company’s financial performance to stakeholders. 
• Helps manage cash positions effectively and plan for future expenditures.

For example

Suppose you own an online retail store that accepts credit card payments. Throughout the month, customers purchase products using their credit cards. At the end of the month, you receive a report from your payment processor showing all the transactions.

You reconcile this report with your sales records to make sure every payment received matches a sale recorded in your system. You notice that a large payment from a customer doesn’t appear in your sales records. After investigating, you discover a technical glitch in your sales software that failed to record the transaction. By identifying this issue during reconciliation, you can correct your records and make sure your financial statements are accurate. 

How to do a credit card reconciliation

Here’s an easy to follow 8-step guide on how to do a credit card reconciliation:

1. Gather all your credit card statements and receipts

• Credit card statements: collect the latest credit card statements from the issuer. 
• Internal records: prepare your receipts, invoices, expense reports, and internal ledger (if available). 
• Bank account statements: for payments made, have the corresponding bank statements on hand.

2. Check the opening balance

Compare the opening balance on the credit card statement with your internal records. Make sure that the previous balance matches your records and any payments made.

3. Compare the transactions

• Match transactions: go through each transaction on your credit card statement and match it with receipts, invoices, or any internal records. 
• Identify missing transactions: make sure every transaction on your internal records is reflected on the statement and vice versa.

You should watch out for:

• Discrepancies in amounts: for example, a receipt shows £50, but the statement says £55. 
• Duplicate charges: the same transaction appearing multiple times. 
• Unauthorised or fraudulent charges: transactions you don’t recognise

4. Record the adjustments

• Make adjustments in your internal records for any legitimate but unrecorded transactions or differences in the amounts (e.g., currency conversion fees). 
• If there are refunds, credits, or chargebacks, make sure these are reflected in both the statement and internal records.

5. Verify the payments

• Make sure that payments made towards the credit card (e.g., direct debit payments) are accurately recorded in both the credit card statement and your bank account statement. 
• Check that the payment dates and amounts match.

6. Investigate any discrepancies

If you find any discrepancies, investigate:

• Receipts/invoices: cross-check receipts or invoices with the amounts on the statement. 
• Vendor contact: contact the vendor if there’s a charge that you don’t recognise or believe to be incorrect. 
• Bank/issuer contact: if necessary, contact your credit card issuer or bank for assistance with unauthorised or fraudulent charges.

7. Finalise the reconciliation

• Once you’ve confirmed all transactions, update your internal accounting records to reflect any corrections. 
• Calculate the ending balance from your internal records and match it with the closing balance on the credit card statement.

8. Document the process

Document the reconciliation process for your records, making a note of any discrepancies and how they were resolved. This helps with future audits and keeps a clear financial trail. 

And that’s how to do a credit card reconciliation in 8 simple steps.

Automate you credit card reconciliation with Capture Expense

If you have any questions about how to do a credit card reconciliation or you just want Capture Expense to handle the entire process for you, we’ve got you covered! Book a personalised demo today.

Confronting an employee about expense fraud is never easy, but it’s a serious issue that needs addressing. It can be awkward and uncomfortable, leaving you wondering how to handle the situation effectively.  

Do you know what to do when you catch an employee with their hand in the cookie jar? Are you ready to learn how to confront an employee about expense fraud?

Here we go. 

Why would your employee want to commit expense fraud?

Before we get into the how to confront an employee about expense fraud, let’s have a think about the why.  

There are many examples of business expense fraud. Here are some of the main reasons your employee might decide to commit it:

Financial gain

Your employee may want to increase their income by claiming false expenses. This can include submitting receipts for personal purchases or inflating costs on legitimate business expenses. 

Appear productive

Some employees might fabricate expenses to make it seem like they’re busier or more productive than they actually are. This can be a way to justify their position or performance in the company.  
 
For example, your employee might submit false travel expenses for meetings that never took place to give the impression of being heavily involved in projects.

Lack of respect for the company

When your employees feel undervalued or have grievances against the company, they might commit fraud as a form of retaliation or out of a sense of entitlement. 

Accidental misunderstanding

In some cases, your employees might not fully understand the company’s expense policies. This can lead to unintentional fraud, where they claim expenses that they mistakenly believe are legitimate. 

Before you confront your employee of expense fraud 

Gather evidence

• Questionable receipts: collect all receipts that appear suspicious or inconsistent. 
• Inflated receipts: identify receipts that seem excessively high or do not match typical expenses for similar items or services. 
• Company handbook: have a copy of the company handbook that clearly outlines what constitutes legitimate business expenses and what doesn’t. 

Verify the evidence 

• Cross-check receipts: compare the questionable receipts with similar past expenses to identify any anomalies. 
• Consult relevant policies: ensure the suspected fraudulent expenses clearly violate the company’s expense policies as stated in the handbook or the expense policy template. 
• Seek expert opinion if needed: if unclear, consult with a finance or HR expert to verify the legitimacy of the receipts. 

How to confront an employee about expense fraud 

Expense fraud is a serious issue that can have a significant impact on your business. If you suspect that an employee has committed expense fraud, it’s crucial to address the situation promptly and professionally.  

Here’s a step-by-step guide on how to confront an employee about expense fraud:

Step 1: Set up a meeting with your employee

Start by arranging a private meeting with the employee in question. Ensure that the setting is confidential and free from distractions. This creates a safe environment where the employee can speak openly.

Step 2: Explain the issue

Clearly explain the nature of the issue. Detail how the suspected fraud impacts the business financially and operationally. Make sure to outline how your employee’s actions are involved. Being transparent about the situation sets the stage for an honest conversation.

Step 3: Review the documentation

Present the receipts or other documentation that you consider fraudulent. Ask your employee to explain these records. Give them the opportunity to provide their side of the story and any context that might be relevant.

Step 4: Encourage justification

Encourage your employee to justify the situation. Listen attentively to their explanation. It’s important to remain open-minded and consider all information before making any judgments.

Step 5: Take appropriate action

Based on your employee’s response, decide on the next steps. If your employee is found guilty of committing fraud, consider the financial amount involved and the severity of the offence. Actions could range from a warning to termination, depending on the gravity of the situation. 

Regain control over your spend with Capture Expense 

Take control of your company’s expenses and prevent business expense fraud. Book a demo with Capture Expense today to ensure no fraudulent claims slip through and keep your spend aligned with your policies.