Some of our employees have been working at a remote site for most of this year and they have been paid £20 a day on top of their wages for every night away from home. It has been paid as a payment direct to them rather than through payroll. My question now is do they have to declare this income and will they have to pay tax on it? Also would it be better to pay it through payroll?
I'd be surprised if £20 per night was allowed. We had a dispensation from HMRC to pay £15. It was paid cash and isn't declared on a P11D. However the rules on these expenses changed recently and all existing dispensation have to be re-negotiated or brought in line with the recommended amounts which depend on hours worked away from home etc. I've read through a huge pile on bumpf on it fron Hmrc and neither me, my boss or even our accountant fully understand it so I would say you are best taking further advice.
That's pretty much the reaction I had too. its very contradictory and vague and refers to things like regular without properly defining regular and it all depends on how many hours they are working away etc. Do they get their meals or accommodation paid for? ours get their accommodation but no meals.
We pay directly for travel and accommodation, the extra £20 a day they get is generally the extra expenses of living away from home - food mostly. Did you pay yours through payroll?
No. it was given in cash. The original dispensation was set up before my time but the company argues that the £10 a day they wanted to allow was not enough to cover the meal expenses.
Its now called Benchmark Rates apparently but there are rules regarding whether they are there regurlaly or not as to whether it becomes a permanent workplace rather than temporary. Our men although they work away a lot are attending various different sites around the country rather than one site. The risk you run is that HMRC could turn round and say this remote site has now become their permanent workplace in which case the payments are subject to tax.
