Personal Incidental Expenses are also known as PIEs. These are an allowance that is available and you can claim as a business expense if you stay away from home overnight for work reasons.
As a director who runs your own UK company, you may travel to different locations for business reasons.
So, if you stay away from home overnight for work-related reasons, you may incur incidental costs.
When your work involves you staying away from home overnight, you will incur some personal expenses. These expenses are non-business, but the PIEs allowance allows you to claim to cover these.
Other initial thoughts
The PIEs allowance can often be missed therefore please make sure that you claim for these when you stay away overnight for business. Another expense that is often missed by contractors is called Trivial Benefits.
Have a read of my article covering tax tips for contractors (this is a member only article and you can read it if you sign up as a member)
What PIES cover and what you can claim
What is covered?
PIEs are an available allowance. The type of costs that these allowances would cover could include:
- buying newspapers
- paying for laundry
- phoning home
The rates that are available
There are fixed allowances available when you claim for Personal Incidental Expenses.
You do not have to report or pay anything to HMRC if you claim no more than:
- £5 per night for travel within the UK e.g. when you are in a hotel overnight or when you are renting temporary accommodation
- £10 per night for travel outside of the UK when you are contracting abroad
Other things to think about
So, if any of the overnight expenses that you claim are not exempt, you may have to report the costs to HMRC. In turn, you will need to deduct and pay tax and National Insurance on these.
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 full amount that you pay to your employee, not just the amount above the £5 or £10 threshold
Also, when you claim for PIEs, you do not need to ask for or keep any receipts. Then, you can claim the fixed rate of £5 or £10 per night. You can claim this for each night that you spend away from home for work-related reasons.
You should also note that you cannot claim for PIEs if you fall foul of the two-year rule..
Not all contractors are aware of the PIEs allowance; it seems. It can make a difference, though, especially if you are staying away from home overnight regularly during the year. So, if you are not yet claiming for PIEs and can do so, please do claim in the future.
Link to Contractor Advice UK group on LinkedIn https://www.linkedin.com/groups/4660081/