Expense management for a UK operation
The UK team spends money before it makes any. Without a policy and a system, the first anyone at head office sees of it is a credit card statement three weeks later with no receipts attached.
A UK expense policy, the system behind it and the VAT it recovers
A UK team spends before it earns. Without a policy and a system the first head office sees is a card statement three weeks later with no receipts, and it is the main route by which recoverable UK VAT is lost.
What you get
- UK expenses policy written
- Approved mileage and subsistence rates
- Expense app set up and rolled out
- Approval routing to your nominated approver
- VAT recovered where receipts allow
- Feed straight into the bookkeeping
What we do
A UK expenses policy
Written so reimbursements stay outside the tax net. Reimbursing a real cost against a receipt is not taxable; a round-sum allowance is pay.
The rates that matter
Mileage at approved rates, subsistence, and the twenty-four month rule that decides whether travel to a site is allowable at all.
An app people will use
Receipts photographed at the point of spending, which is the only reliable way to capture them.
Approvals routed
To whoever you nominate, within limits you set, rather than to whoever is awake.
VAT recovered
On fuel, hotels, subsistence and subscriptions, which adds up and is often lost because no one kept a valid VAT receipt.
Straight into the books
Coded as it arrives rather than reconstructed at the month end, with the receipt attached to the transaction.
Expenses are a small number that causes a disproportionate amount of trouble. They are the main route by which VAT is lost, the main reason a benefits problem appears at the year end, and the thing most likely to create an argument between a UK manager and a finance team in another country.
The policy comes first
A UK expenses policy has to do two things at once: control spending, and keep the reimbursements outside the tax net. Reimbursing an actual business cost against a receipt is not taxable. Paying a round sum allowance, or reimbursing something that is personal, is pay, and is taxed as pay. The line runs through mileage, subsistence, home working, travel to a temporary workplace and entertaining, and each has its own rule.
- Mileage at HMRC's approved rates is tax free. Above those rates the excess is taxable, and below them the employee can claim relief on the difference.
- Subsistence is reimbursable on actual cost with a receipt, or at benchmark rates where the conditions are met.
- Travel to a temporary workplace is allowable; travel to a permanent one is not, and the twenty-four month rule decides which is which. This catches consultants and anyone seconded to a client site.
- Entertaining is generally not deductible for corporation tax and the VAT is generally not recoverable, but staff entertaining is treated differently from client entertaining and needs to be coded apart.
The system
We set up an expense app your people photograph receipts into from their phone, with approvals routed to whoever you nominate and a spending limit you set. It feeds straight into the bookkeeping, so expenses are coded as they arrive rather than reconstructed at the month end, and the receipt is attached to the transaction where an inspector would want to find it.
Reclaiming VAT on expenses
UK VAT on employee expenses is recoverable where there is a valid VAT receipt and the cost is for the business. On fuel, hotels, subsistence and software subscriptions this adds up quickly, which is often lost because the receipt was a card slip rather than a VAT receipt, or because no one looked. A system that captures the receipt at the point of spending recovers most of it automatically.
Where this connects to the year end
Anything reimbursed that is not a genuine business expense is a benefit, reportable on the annual return and covered on the benefits page. Getting the policy right in month one is how you avoid that conversation in month eighteen.
What we need from you
- Who approves spending in the UK, and up to what limit
- What the group's existing policy says, if there is one
- Whether anyone drives for work, and in whose car
- Any company cards already issued
Common questions
Can we just use our group's expenses policy?
Usually with amendments. The structure will be fine; the rates and the treatment of mileage, subsistence and temporary workplaces are UK-specific, and those are exactly the areas where getting it wrong creates a taxable benefit.
What counts as a valid VAT receipt?
One showing the supplier's VAT number and the VAT charged. A card slip is not enough, which is why so much VAT on expenses goes unclaimed.
Do we have to use an app?
No, but the alternative is a spreadsheet and a shoebox, and that is where receipts and VAT go missing. The app pays for itself in recovered VAT on most UK teams.
Is mileage taxable?
Not at or below HMRC's approved rates. Above them the excess is taxable pay. Below them the employee can claim tax relief on the shortfall, and should be told so.
Related services
Bookkeeping and annual accounts
QuotedUK bookkeeping and statutory accounts
Xero set up in the parent's currency and account codes, bank feeds, monthly close, and year-end accounts under FRS 102, FRS 101 or IFRS filed at Companies House and with the tax return.
Management accounts and group reporting
QuotedA monthly pack in the group's format, on the group's close calendar
Monthly close, the reporting pack in the group's template, budget against actual, intercompany agreed, and the year-end schedules for the group auditors.
Credit control and collections
QuotedGetting UK invoices paid: purchase order to escalation
Invoices raised on time, a chase sequence that starts before the due date, someone making the call in UK hours, and a weekly report so the parent can see the position rather than ask.
Get a fixed quote
Tell us where the parent company is and what the UK operation has to do.
