Expense Policy Template #
Company: [Company Name]
Effective date: [Date]
Owner: [Finance/HR/Operations]
Applies to: Employees, directors, contractors and temporary workers where agreed in writing.
1. Purpose #
This policy explains what business expenses the company will reimburse, how to claim them, and what evidence is required.
Expenses must be:
- reasonable;
- necessary;
- wholly for business purposes;
- supported by receipts or other evidence.
The company must usually report employee expenses and benefits to HMRC and may need to pay tax and National Insurance depending on the type of expense or benefit.
2. General Rules #
Employees must:
- obtain approval before incurring significant expenses;
- choose the most cost-effective option, considering time, safety and business need;
- submit claims within [30 days] of the expense date;
- provide VAT receipts where available;
- not claim for personal costs, fines, penalties, or expenses already reimbursed by another party.
The company may reject claims that are late, excessive, unsupported, or outside this policy.
3. Approval Limits #
| Expense type | Pre-approval required? | Approver |
|---|---|---|
| Travel over £[amount] | Yes | Line manager |
| Accommodation | Yes | Line manager |
| Client entertainment | Yes | Director/manager |
| Training/conferences | Yes | Department head |
| Routine local travel | No, unless over £[amount] | Line manager |
Directors’ expenses should be reviewed by [another director / finance lead / accountant] where practical.
4. Travel #
Business travel means travel required for work, excluding normal commuting between home and the usual workplace.
Public Transport #
Standard or economy class should be used unless a higher class is approved in advance for a clear business reason.
Taxis and Ride-Hailing #
Taxis may be claimed where:
- public transport is not practical;
- employees are travelling late;
- employees are carrying heavy equipment;
- there is a safety or accessibility reason.
Flights #
Flights must be approved in advance.
Economy class should be used unless otherwise approved.
5. Mileage for Personal Vehicles #
Employees using their own vehicle for approved business journeys may claim mileage at HMRC-approved rates.
| Vehicle | First 10,000 business miles | Each business mile over 10,000 |
|---|---|---|
| Cars and vans | 55p per mile | 25p per mile |
| Motorcycles | 24p per mile | 24p per mile |
| Bicycles | 20p per mile | 20p per mile |
Employees must provide:
- date of journey;
- start and end locations;
- business purpose;
- number of business miles;
- vehicle type.
The company may also pay 5p per passenger per business mile where the employee carries another employee in a car or van on a qualifying business journey.
Employees using their own vehicle must ensure they hold:
- a valid driving licence;
- MOT where required;
- road tax;
- appropriate insurance including business use;
- a roadworthy vehicle.
6. Accommodation #
Accommodation should be reasonably priced and appropriate for the location.
Employees should use preferred providers where available.
Reimbursable costs may include:
- room rate;
- reasonable breakfast where not included;
- Wi-Fi where required for work;
- parking where necessary.
The company will not reimburse:
- minibar charges;
- in-room entertainment;
- spa treatments;
- personal extras.
7. Meals and Subsistence #
The company will reimburse reasonable meal costs incurred during approved business travel or while working away from the usual workplace.
| Meal | Limit |
|---|---|
| Breakfast | £[amount] |
| Lunch | £[amount] |
| Dinner | £[amount] |
| Overnight incidental expenses | £[amount] |
Alcohol is not normally reimbursable unless part of approved client entertainment.
8. Client Entertainment #
Client entertainment must have a genuine business purpose and be approved in advance.
Claims must include:
- names of attendees;
- organisations represented;
- business reason;
- date;
- venue;
- receipt.
Entertainment must be reasonable and proportionate.
Lavish or personal entertainment will not be reimbursed.
9. Working from Home and Office Costs #
The company may reimburse approved business costs such as:
- postage;
- stationery;
- business phone calls;
- approved software or subscriptions;
- equipment agreed in advance.
Home office furniture, broadband, utilities or rent contributions require prior written approval and may have tax implications.
10. Mobile Phones, Software and Subscriptions #
The company will reimburse only business-related costs approved in advance.
Where an item has mixed personal and business use, the company may reimburse only the business proportion or decline the claim.
11. Gifts and Small Benefits #
Gifts to employees or clients require approval.
For employee gifts, HMRC’s trivial benefit exemption may apply where the benefit:
- costs £50 or less;
- is not cash or a cash voucher;
- is not a reward for work or performance;
- is not part of the employee’s contract.
12. Non-Reimbursable Expenses #
The company will not normally reimburse:
- normal commuting;
- parking fines, speeding fines or penalties;
- personal entertainment;
- clothing, unless protective or uniform-related and approved;
- childcare or pet care;
- loss of personal property;
- expenses without receipts, unless approved as an exception;
- upgrades, luxury travel or premium services without approval.
13. Corporate Cards #
Corporate cards must be used only for business expenses.
Cardholders must submit receipts and coding details by [deadline] each month.
Personal use of corporate cards is prohibited.
Accidental personal use must be reported immediately and repaid.
14. Claim Process #
Employees must submit claims through [expense system / spreadsheet / email].
Each claim must include:
- date;
- supplier;
- amount;
- VAT amount where shown;
- business purpose;
- project/client code where relevant;
- receipt or invoice.
Claims will usually be reimbursed through payroll or bank transfer within [number] working days after approval.
15. VAT Receipts #
Where possible, employees must obtain VAT receipts showing:
- supplier name and VAT number;
- date;
- description of goods or services;
- VAT amount or VAT-inclusive total.
Card slips alone may not be sufficient.
16. Fraud, Misuse and Disciplinary Action #
False, inflated, duplicate or personal claims may be treated as misconduct or gross misconduct.
The company may recover overpaid amounts and take disciplinary action.
17. Exceptions #
Any exception to this policy must be approved in writing by [Finance Director / Managing Director / Operations Lead].
18. Review #
This policy will be reviewed annually or when tax, HMRC or business requirements change.
Next review date: [Date]
Disclaimer #
This policy is a template and does not constitute legal or tax advice.
It should be reviewed by your accountant, employment adviser or legal adviser before adoption, especially if you provide benefits, company cars, PAYE Settlement Agreements, or director expenses.