Introduction -Personal Incidental Expenses
Personal Incidental Expenses (PIE) are an available allowance. Therefore, you may be able to claim these as part of your overall business expenses.
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. This is typically an employee per day to cover their out-of-pocket expenses when travelling on the employer’s business.
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 expenditures. PIEs are an allowance available to business owners and employees when they stay away from home overnight for work reasons. This could be in respect of a one-off business trip or staying away as part of your general contract work.
As a director who runs your own UK company, you may travel to different locations for business reasons. Therefore, you may incur incidental expenses if you stay away from home overnight for work-related reasons.
To summarise, you will more than likely incur personal expenses when your work involves an overnight stay away from home. Although these expenses are non-business, the PIEs allowance allows covers these. When you can claim the allowance, it can be part of your overall business expense report, saving your company tax.
Other initial thoughts
The PIEs allowance can often be missed. Therefore, please make sure you claim for the incidental expenses when you stay away overnight for business.
Besides your travel expenses incurred, 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. Personal incidental expenses include sundry-type costs you will incur while working away. We detail a few of these below.
As a side note, contractors often miss another expense called Trivial Benefits.
Please have a read our article covering tax tips for contractors.
Personal Incidental Expenses examples -what do they cover
PIEs are an available allowance for your business. Some personal incidental expenses examples of such items could include:
- Coffees at the airport or train station.
Please note that if any of the overnight 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 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
There are fixed allowances available when you claim for Personal Incidental Expenses.
You do not have to report or pay anything to HMRC in respect of incidental expenses if you claim no more than:
- £10 per night in respect of incidental personal expenses for travel outside of the UK when you are contracting abroad.
Other things to think about
If any overnight expenses you claim are not exempt, you may have to report the costs to HMRC. You will need to deduct and pay tax and National Insurance on these.
What you must do
What’s more, 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.
When you claim Personal Incidental Expenses, 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
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.
Not all contractors are aware of the Personal Incidental Expenses allowance. Therefore, besides claiming for your contractor travel expenses such as accommodation costs, rail fares, mileage, etc., when you stay away, you can also claim for the PIEs. This can make a difference, especially if you are staying away from home overnight regularly during the year. Therefore, if you are not yet claiming for PIEs and can do so, please consider claiming for these in the future.
Link to Contractor Advice UK group on