What should be in an expense policy?

Why is an expense policy important?

It’s important that your all your employees understand what types of expenses are legitimate and claimable, as well as how they can be reclaimed.

An expense policy is an important element in educating your teams on how expenses are regarded and managed in your business. The policy is also vital to help resolve any confusion or ambiguity, and avoid expense fraud. 

What are the key elements of an expense policy?

Expense policies can vary, according to the type of business, but generally they have the following elements in common: 

🛤 Travel expenses

These are normally the most common business expenses, and cover travel expenses to other business locations, a training course, or to meet with clients. 

Claims for the costs of fuel, for business travel, are normally guided by allowances set by His Majesty’s Revenue & Customs. Make sure your policy is clear about what the reimbursable mileage rates are for your employees.      

🏨 Accommodation expenses

Very often, you will book and pre-pay for business accommodation for your employees, but there are other expenses associated with staying away on business.

It’s important that your policy contains details of accommodation and subsistence allowances in the UK, and overseas if your colleagues travel abroad. 

📝 Expenses for office supplies

This is a common expenses category as employees often pay for office supplies and request reimbursement. If there are limits on the value of a claim, or the types of office supplies that can be claimed for, (for example paper and pens, but not computer equipment) make this clear in your policy. 

💃🏻 Expenses for business entertainment

Your policy should make clear what makes a valid claim for business entertainment, as tax free claims are tightly controlled by HMRC. See our blog for guidance on business entertainment expenses.  

Make sure that your expense policy is clear and concise. This is an important document for the protection of your company’s money. It also needs to be transparent and fair to all employees.

There are online templates available and it is also worth considering professional advice in the drafting of this key document.

It’s important to take time to brief your employees to ensure that they understand the role, value and importance of your expenses policy. 

How can I manage company expenses more easily?

The expense management solutions from Expend can help you to manage company expenses more easily, and help validate expenses in real time, consistent with your expense policy. 

The Expend Mobile App can empower your team with a complete expense solution, in their pocket. Your team members can create expense claims, track company mileage, review employee expenses all within the app. 

And to retain full control of incidental business spending, consider a business payment card such as the Expend Employee Card. This provides a Mastercard platform payment facility for company expenses with full control of employee spending. 

Disclaimer: This is not legal, accounting, or tax advice - it's simply a guide. If you need help, check with your accountant or contact HMRC directly.