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HMRC internal manual

Employment Income Manual

Exemption for amounts which would otherwise be deductible: industry scale rates

S289B(1) ITEPA 2003

Employers wishing to pay or reimburse employees at a rate that has been agreed with HMRC at an industry-wide level, such as the agreed stable lads subsistence rates (See eim68505), can apply to HMRC for an approval notice. Their application should make it clear that they intend to pay at an industry scale rate published by HMRC. An approval notice issued by HMRC for use of an ‘industry scale rate’ will have the same effect as an approval notice for a bespoke rate and will cease to have effect from a date no later than the end of a period of 5 years beginning with the date on which the approval takes effect.

Employers who pay or reimburse expenses under an approval notice for an ‘industry scale rate’ will not need to undertake a sampling exercise to show that the rate is reasonable, but will still need to have a checking system in place (eim30270) to confirm that:

  • the employee’s travel was in the performance of their duties or to a temporary place of work, on a journey that is not substantially ordinary commuting
  • the employee was absent from their normal place of work or home for a continuous period in accordance with the terms of the industry agreement
  • the employee incurred a cost on a meal (food and drink) after starting the journey and retained appropriate evidence of their expenditure

If HMRC, in agreement with representatives of a particular industry, amend an industry scale rate, the responsibility for ensuring that they are using the most up to date rates will rest with the employer.

Agreement to amend an industry scale rate will have to be following submission of evidence in support of any change, and this will in most instances require some sort of sampling exercise.

If it becomes necessary to withdraw an industry scale rate within the period of their 5-year agreement, HMRC will issue a revocation notice under section 289C.