What's new in the world of tax and business? Here we feature advice and information on the latest hot topics. To view our full archive of articles, please click here.
For many businesses, employee travel and expenses represent a significant cost. A well-written expenses policy will help you to keep on top of that cost and prevent abuse of expense claims, in a way that is also fair to your staff. It will also allow you to demonstrate to HM Revenue & Customs (HMRC) that you are complying with your legal obligations.
Here are some key areas to consider when creating your expenses policy.
Keep things simple, but flexible
Your policy should state clearly and in detail exactly which expenses can be claimed for mileage and other travel, accommodation, food and drink, client entertainment and so on. If the rules and amounts are simple they are more likely to be remembered, and staff will get used to following them and planning their business trips accordingly.
However, you should incorporate a level of flexibility. Hotels in London can be significantly more expensive than in other parts of the country, for instance, so your policy might include a London weighting to allow for this.
Make it fair to all parties
Clearly, you need to protect your business from extravagant or inappropriate expense claims by staff. But employees also need to be properly reimbursed for the costs they incur while working on your behalf. The aim of a good expenses policy is to ensure that no team member loses out as long as they act reasonably.
Best practice suggests that you should also ensure that the policy is applied universally so that senior managers have to follow similar rules to other staff. Communicate the policy clearly. The policy should be written up and storedin a place where all staff can access it.
It might be advisable to include your senior team members and staff who regularly claim expenses in setting the guidelines and descriptions. Not only will this ensure that everyone understands it and communicates it to their teams, they're also more likely to buy into the policy.
You should also ensure that the policy is regularly updated to take account of new legislation and the changing nature of costs.
Build efficient processes
Staff can begrudge long delays in having their expenses paid, particularly for significant outlays such as rail fares or hotel bills which could lead to difficulties in their monthly cashflow, so ensure that your financial operation - whatever its size - is able to pay expenses promptly and accurately.
Important! Don't forget…
VAT receipts - Your business can reclaim VAT on most employee expenses as long as you have properly documented receipts. Make sure your staff provide original or digital (scanned or photographed) receipts for all relevant expenditure.
The Bribery Act - Entertaining clients is not as straightforward as it used to be. Make staff aware that entertainment claims should include a valid business reason and the names and businesses of all attendees, to avoid falling foul of the Bribery Act 2010. Take legal advice if you are unsure.
If you would like specific advice about expenses or help with setting up processes, please contact us.
- July 2015: Sun, sea, sand…and work
- June 2015: Pensions auto-enrolment: are you up-to-date?
- May 2015: Claiming tax relief on refurbishment
- April 2015: New tax year, new rules: changes to business and personal tax
- March 2015: The new Marriage Allowance
- February 2015: Saving tax before the 5 April year end
- January 2015: VAT for digital business
- December 2014: Stamp duty reforms and business rates feature in pre-Election Autumn Statement
- November 2014: Saving tax on seasonal gifts
- October 2014: Social investment tax relief - could you and your community benefit?
- September 2014: Flexible Working Rights
- August 2014: Tax breaks for charitable giving
- July 2014: The sun is shining: let your business grow
- June 2014: Claiming the new NICs Employment Allowance
- May 2014: Tax-efficient estate planning
- April 2014: The New ISA
- March 2014: 2014 Budget Round-up
- February 2014: Could you save tax ahead of the year end?
- January 2014: Contingency planning: is your business prepared?
- December 2013: Seasonal tax advice for your business
- November 2013: Expansion - is your business ready?
- October 2013: Is your business adequately insured?
- September 2013: Charities update: some recent changes
- August 2103: The new flat-rate state pension: winners and losers
- July 2013: An inspector calls… coping with an HMRC investigation
- June 2013: Raising finance for your business
- May 2013: Ten top tips for reducing your tax bill
- April 2013: The new pension auto-enrolment scheme
- April 2013: The new cash basis: 'simpler' income and expenses?
- January 2013: Saving tax ahead of the year end
- November 2012: Child's play? The new rules on child benefit
- October 2012: Real Time Information: are you ready?
- September 2012: Are you up-to-date on pension auto-enrolment?
- May 2012: After the Budget: planning strategies to implement now
- April 2012: Making your business an Olympic success
- January 2012: The 5 April Year End - plan to save tax now
- November 2011: Autumn Statement 2011
- November 2011: Furnished Holiday Lettings
- October 2011: The Agency Workers Directive
- September 2011: Capital Allowances Are Changing: Make Sure You're Prepared
- June 2011: The Bribery Act: What your business needs to know
- May 2011: Don't get caught out by the taxman!