Per Diem Meaning, Examples, and Rates for 2025

What does per diem mean? 

Per diem is a daily allowance provided to employees to cover expenses such as meals, accommodation, and travel costs when they’re away on business. It simplifies the reimbursement process by offering a fixed amount rather than requiring itemised receipts for each expense. Per diem rates are often regulated by government guidelines and can vary depending on whether the travel is domestic or international. 

This handy system offers a simple, predictable way to cover employee travel expenses without the admin headache. Let’s take a look at what per diem really means, a real-world example, and the rates for 2025. 

What are the per diem rates for 2025? 

Here are the UK per diem rates for 2025, based on HMRC’s meal allowance guidelines:  

Minimum journey time	Maximum allowance
One meal and up to 5 hours of travel	£5
Two meals and 5–10 hours of travel	£10
Three meals and 10–12 hours of travel	£15
24-hour period	£25

Note: These are HMRC benchmark rates. Employers can pay higher rates, but amounts above the benchmark must be reported on a P11D or covered under a PAYE settlement agreement.

Who can claim per diem allowances?

Not every employee automatically qualifies to claim a per diem allowance. HMRC requires the following conditions to be met:

• You’re travelling for work—either as part of your job or to a temporary workplace, not just commuting as usual. 

• You’re away from your normal place of work or home for more than 5 or 10 continuous hours. 

• You’ve bought a meal (food or drink) during your journey and have evidence of the expense (like a receipt or card statement). 

 You can’t claim a meal allowance if

• You didn’t actually buy a meal or drink during your trip. 

• The meal didn’t create any extra cost—for example, if it was something you would’ve eaten at home anyway. 

• You had the meal at home before leaving or after returning. 

• The meal was provided for free as part of a training course, event, or conference. 

• You received a free meal on a train or plane, included in the ticket. 
• The meal included alcohol (that’s not covered under HMRC’s rules). 

International per diem rates: US & global benchmarks

Per diem rates vary country by country. If your business sends employees overseas—or you work for a US-headquartered employer—the following benchmarks apply:

United States (GSA rates)

In the US, the General Services Administration (GSA) sets the standard per diem rates used by federal employees and commonly adopted benchmarks by private

employers:

• Standard continental US (CONUS) rate: $166/day (includes $107 lodging + $59 meals & incidentals)
• High-cost areas (e.g. New York, San Francisco): rates can exceed $350/day
• International rates (OCONUS) are set by the US Department of State and the DoD

Other Key Markets

Country	Approximate Daily Rate	Governing Body
Germany	€28 (domestic day trips)	Federal Finance Ministry
France	~€20 meal allowance	URSSAF guidelines
Australia	AUD $336.50/day (overnight)	ATO (Tax Office)
Canada	CAD $93/day (meals)	CRA (Revenue Agency)

 

For the most accurate and up-to-date international rates, always refer to the relevant government body in the destination country, as rates are typically revised annually.

Is Per Diem Taxable in the UK?

The answer is, it depends.

Whether per diem payments are taxable in the UK relates to the amount paid relative to HMRC’s benchmark rates:

• At or below HMRC benchmark rates: Payments are tax-free and do not need to be reported on a P11D, provided the employee was genuinely travelling for work.
• Above HMRC benchmark rates: The excess is taxable. Employers must report the additional amount via P11D or include it in a PAYE Settlement Agreement (PSA).
• Employees who receive non-benchmarked rates: The full amount must be reported, and tax is due on any portion not supported by receipts or HMRC dispensation.

If stick to HMRC rates and your per diem payments are tax-free. Pay more, and you have a reporting obligation.

Do You Need Receipts for Per Diem?

One of the key advantages of per diem is simplified record-keeping. The rules on receipts are as follows:

• HMRC benchmark rates: No receipts are required. The benchmark rates are accepted by HMRC without supporting evidence, provided the qualifying conditions (time away, business purpose) are met.
• Employer-set rates above benchmark: Receipts might be needed to justify the higher amount, particularly if you are using an authorised mileage or dispensation arrangement.
• Actuals-based reimbursement: If you reimburses actual spend rather than a flat per diem, full receipts are always required.

Best practice is to retain receipts regardless, even when not strictly required—particularly for higher-value meals or when travelling internationally.

 A real-world scenario 

Meet Peter. He works for a tech consultancy based in Manchester and is heading to London for a two-day client workshop. His company has opted to use per diem allowances to make travel expenses easier for everyone. 

Instead of collecting every receipt for coffees, lunches, and taxi rides, Peter receives a fixed daily allowance based on HMRC’s approved rates (see above). On day one, he leaves home at 7am and doesn’t return until after 9pm, so he qualifies for the £25 meal allowance. The company already booked and paid for his hotel and train in advance using the company card—so his per diem just needs to cover meals, snacks, and the odd travel cost like a Tube ride. 

Peter grabs breakfast at the station, picks up lunch near the client site, and finishes the day with dinner close to his hotel. He doesn’t need to keep receipts for each meal because the allowance is a flat rate, but he does make a note of where and when he ate, just in case HR asks for evidence the meals were during the business trip. 

He avoids alcohol (as that’s not covered under HMRC rules) and doesn’t try to claim for the theatre ticket he bought for the evening—he knows that’s a personal expense.  

The next day is a shorter one, so he qualifies for the £10 meal allowance before heading back north. 

Are you looking to reduce admin, speed up reimbursements, and stay fully HMRC compliant?

Managing travel expenses and subsistence allowances can quickly become a hassle—especially when you’re juggling receipts, HMRC rules, and the risk of duplicate claims. That’s where Capture Expense comes in. It helps you streamline the whole process by automating approvals, flagging suspicious claims, and making sure your per diem rates are applied correctly and consistently. Book a personalised demo today to see Capture Expense in action.