Building a Company Expense Policy: A Guide for UK Businesses

There are a few things that go into writing a good company expense policy, including defining expense categories and budgets, establishing fair and consistent rules, and explaining guidelines in a way that’s easy for the average employee to follow. You’ll also want to establish, for the team on the job, how they should be reporting expenses and benefits to HMRC.  

This guide establishes guidelines for what makes a sound and fair employee expense policy. In addition to this, we cover the core elements you will need at a minimum, including what can and cannot be claimed, the budgetary allowances for each category, as well as how and when to reimburse staff. Clear communication (and transparency) is the aim of the game.

For the sake of trust and transparency, staff need to know they’ll be reimbursed when they pay for certain things. Having reimbursement guidelines as part of your expense policy means you can avoid ambiguity and awkward questions from staff of ‘When will I get this paid back?’.

Some expenses and benefits are taxable and, therefore, must be reported to HMRC. There are two options for doing this: either through your payroll (which we recommend as it’s easiest) or online via P11D forms. With payrolling benefits, you don’t need to report expenses and benefits for each employee at the end of the tax year. You must still submit a P11D(b) online and report Class 1A National Insurance.