Expenses Policy

A complete expenses policy for a UK employer. It sets out what employees (and directors) can and cannot claim, the evidence needed, who approves claims, how business mileage, travel, accommodation, subsistence and entertaining are handled, and how expenses interact with PAYE, benefits in kind and VAT recovery.

A written policy protects the business twice: it keeps spending under control, and it gives you the evidence HMRC expects to see if it questions whether a payment was a genuine business expense or disguised pay.

• When you first take on staff who will travel or spend money on the business’s behalf
• To replace informal “ask the boss” arrangements with consistent written rules
• When reviewing expenses after an HMRC compliance check, an audit point or a misuse incident
• Each April, when HMRC rates and thresholds may change

• Insert your business name and choose the approval limits, deadlines and allowances that suit you
• Check every rate in Appendix A against the current figures on gov.uk before issuing – HMRC rates change, and the car mileage rate rose for 2026/27
• Delete any sections that do not apply (for example overseas travel or company cars)
• Issue it with the Expense Claim Form in this pack and ask each employee to sign the acknowledgement