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HMRC internal manual

Employment Income Manual

HM Revenue & Customs
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Employment income: scale rate expenses payments: subsistence expenses: sampling guidance

The guidance on this page applies for the tax years up to and including 2015-16.  For tax years 2016-17 onwards the benchmark scale rates have been revised and are now included within the exemption for amounts which would otherwise be deductible. See eim30200 onwards.

Subsistence expenses are a common example of expenses which employers choose to reimburse by means of a scale rate payment (see EIM05200). They should be requested and agreed as part of a dispensation under Section 65 ITEPA 2003 (see EIM30050 onwards). HMRC officers considering such applications need to be satisfied that the proposed scale rate payments are set at a level which broadly represents the amount that their employees are actually spending on allowable subsistence expenses. Employers should therefore be prepared to provide HMRC with evidence of the amount that their employees are spending. Such evidence should ideally be in the form of receipts but other evidence, such as an employee’s contemporaneous record of expenses incurred, should also be considered.

Sampling guidance

HMRC accept that it will be impractical for some employers to obtain evidence of expenditure incurred by every one of their mobile employees. Where that is the case, we shall accept evidence in the form of a sampling exercise based on the expenses incurred

  • by a random sample
  • of 10% of the eligible employees
  • for a period of one month.

Employers will have to be able to satisfy HMRC that their 10% sample really is a random one - for example, every 10th name from an alphabetical list of the employees concerned. HMRC will accept the evidence produced by such a random sampling exercise as the basis for agreeing the amount of the employer’s scale rate subsistence payment.

For the avoidance of doubt, it is not necessary for all eligible employees to keep evidence of their expenses for a month. Evidence need only be kept by the 10% of employees who are randomly selected to take part in the sampling exercise.

See also:

EIM05215 Expenses to be included
EIM05220 Sampling exercise incomplete

Frequency of sample

If a dispensation is given following a sampling exercise of the kind described above, no further sampling exercise will be necessary - and the dispensation will remain in force - whilst circumstances remain unchanged.

Effect of this guidance on existing dispensations

Dispensations which were issued before this sampling guidance was published (February 2008) are not affected by this guidance, and will remain in force. However, the sampling guidance should be followed, where appropriate, if such an employer

  • applies for a new dispensation, or
  • wishes to increase the amounts payable under the existing dispensation by more than the rate of inflation.