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Introduction
Personal Incidental Expenses (HMRC) for UK contractors, business owners and employees are an overnight allowance while working away. These are also known as PIEs and you may be able to claim these as part of your overall limited company contractor expenses. In this article, we will look at PIEs in depth and also look at some Personal Incidental Expenses examples. The PIEs are similar to a Per Diem rate (Latin for per day or daily) or daily allowance. It is a specific amount of money that a business gives an individual as a personal expense allowance. This is typically an employee per day to cover their out-of-pocket personal expenses when travelling on the employer’s business and incurring an overnight stay. Therefore, the PIEs are effectively like a HMRC Per Diem allowance.
Initial thoughts
When you incur travel expenses as part of your working day, you may work away from home overnight. If you are, you may also incur some incidental overnight expenses however, what are incidental expenses? PIEs are an allowance available to business owners and employees when they stay away from home overnight for work reasons. This incidentals allowance could be in respect of a one-off business trip or staying away as part of your general contract limited company work. We will take a look at some PIEs examples late on.
Work locations and expenses
As a director who runs your own UK company, you may travel to different locations for business reasons. Therefore, you may incur incidental travel expenses if you stay away from home overnight for work-related reasons.
To summarise the Personal Incidental Expenses meaning, you will more than likely incur some personal incidental overnight expenses when your work involves a stay away from home overnight. Although personal incidentals are non-business, the PIEs allowance is an overnight expenses allowance and it covers such personal expenses. When you can claim the overnight allowance, it can be part of your overall business expense report, saving your company tax.
Personal Incidental Expenses (UK)
The overnight allowance for PIEs can often be missed. Therefore, please make sure you claim the incidental overnight expenses allowance when you stay away from home for business.
Besides the travel expenses you incur, you can also claim for the PIEs. Therefore, as part of your expenses paid or reimbursed, please ensure you include any PIEs on your expense report. Incidental travel expenses will include sundry-type incidental costs you will incur while working away. We also detail several Personal Incidental Expenses examples below and it is notable that these are small incidental type costs, where you may not have a receipt.
Other guides
On this site, we have many other guides which help you navigate the world of contracting. Many of these cover business expenses and what you can claim under current HMRC rules.
Key to note, many limited company contractors often miss an expense called Trivial Benefits.
Please also read our article which covers tax tips for UK contractors.
Personal Incidental Expenses examples -what do they cover
PIEs are an available allowance for your business and they cover items which you would not incur if you were at home. As a UK contractor, you can claim this overnight allowance working away at a client site. Some Personal Incidental Expenses examples of such items could include:
- Telephone calls home.
- Expenses for laundry.
- Buying newspapers.
- Coffee at the airport or train station.
Please note that if any of the overnight incidental expenses you cover in your claims are not exempt, you may have to report the costs to HM Revenue and Customs (HMRC). The word `exempt’ on the HMRC website relates to the given limits for incidental overnight expenses of £5 and £10. Therefore, we will conclude that HMRC means PIES would need reporting to them if they exceed the given limits. Reporting to HMRC will result in deducting PAYE tax and National Insurance Contributions on the amounts paid.
The available rates for Personal Incidental Expenses
There are fixed allowances available for HMRC incidental expenses when you make a claim for these. The tax office set these rates and they have been at the same level since HMRC brought these in. You do not have to report or pay anything to HMRC in respect of incidental overnight expenses if you claim no more than the current prescribed rates per night.
In the UK
£5 per night is the allowed rate in respect of incidental personal expenses (UK) in respect of travel within Great Britain. For example, staying in a hotel overnight or renting temporary accommodation.
Outside the UK
You can claim £10 per night in respect of incidental personal expenses for travel outside of the UK when you are contracting abroad.
Personal Incidental Expenses -other things to think about
If any overnight expenses you claim are not exempt, you may have to report the costs to HMRC. As a result, you will need to deduct and pay tax and National Insurance on these.
What you must do
It is important to note, for expenses above the £5 or £10 threshold, you must:
- Report them on form P11D.
- Deduct and pay PAYE tax and Class 1 National Insurance through your payroll. Use the amount you pay your employee, not just the amount above the £5 or £10 threshold.
No receipts required for Personal Incidental Expenses
When you claim for the PIEs overnight allowance, you do not need to ask for or keep receipts. As a result, you can claim the fixed rate of £5 or £10 per night. You can claim this for each night you spend away from home for work-related reasons to cover your incidental expenses.
The 24-month rule
As a UK contractor, you should also note that you cannot claim for PIEs if you fall foul of the 24-month rule. This relates to being unable to claim for travelling costs once you know that you will be based at a given work site for more than 24 months.
Final thoughts
Not all contractors are aware of the Personal Incidental Expenses allowance. Therefore, besides claiming for your UK contractor travel expenses such as accommodation costs, rail fares, mileage, etc., when you stay away, you can also claim for the PIEs allowance in respect of any incidental overnight expenses. This can make a difference, especially if you are staying away from home overnight on a regularly basis during the year. Therefore, if you are not yet claiming for the PIEs overnight allowance and can do so, please consider claiming for these in the future.
Link to Contractor Advice UK group on
