For many businesses, employee travel and expenses represent a significant cost. A well written expenses policy will help to keep on top of that cost and help to prevent abuse of expense claims. It also allows you to demonstrate to HMRC that you are complying with your legal obligations.
Key areas to consider when creating your expenses policy:
Keep it simple but flexible
The policy should state clearly exactly which expenses can be claimed, such as, mileage and other travel, accommodation, food and drink, client entertainment. If the rules and amounts are simple they are more likely to be remembered and followed.
There is, however, a need for a level of flexibility. Hotels in London can be significantly more expensive than in other parts of the country so your policy may incorporate a London weighting.
Make it fair to all parties
The aim of an expenses policy is to ensure that no team member loses out as long as they act reasonably. Best practice suggests that you should ensure the policy is applied universally, so senior managers have to follow similar rules to other staff.
The policy should be written up and stored in a place where all staff can access it. Review the policy regularly to ensure it is updated to take account of new legislation and the changing nature of costs.
Build efficient processes
All of us begrudge long delays in having expenses re-imbursed, so ensure your financial operation is able to pay expenses promptly and accurately.
Businesses can claim VAT on most employee expenses as long as you have properly documented receipts. Make staff aware that entertainment claims should include a valid business reason and the names and businesses of all attendees, to avoid falling foul of the Bribery Act 2010.
If you wish to discuss specific advice about expenses or help with setting up processes, please contact us.