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Download the UK expense policy (Word)An expense policy is the document that tells staff what they can spend, how to claim it back, and what evidence to keep. Without one, every claim becomes a negotiation and the bookkeeper inherits a pile of inconsistent receipts. In the UK the policy also has a tax job: it should steer claims so the business reclaims VAT where it can, applies the right treatment to entertainment, and uses HMRC’s rates for subsistence and mileage. This template gives you that structure as an editable skeleton.
The download is a sectioned policy you can adapt: purpose, scope, the general principle, then a row per category with the rule and the limit, ending with approval, submission, and non-reimbursable items.
The general principle
Every UK expense policy rests on one rule: a cost is only claimable if it is wholly and exclusively for business, and a receipt supports it. Where the business is VAT registered and wants to reclaim VAT, that receipt needs to be a valid VAT invoice. Stating this up front sets the bar for everything below it, and gives an approver a clear reason to reject a personal or unevidenced claim.
Subsistence: scale rates or actual cost
For meals while travelling, the policy should choose between two approaches. HMRC’s benchmark scale rates let you pay a set tax-free amount based on how long the employee is away, without checking each receipt. Alternatively you reimburse actual cost against receipts. Both are legitimate; the mistake is letting staff mix them, claiming the scale rate and the receipt for the same meal. The template points to the scale-rate approach and links to a meal-allowance cheat sheet for the current amounts.
Client entertainment is the trap
The row most policies get wrong is entertainment. Client entertainment can be reimbursed, but it is not deductible for corporation tax and its input VAT cannot be reclaimed. If it is lumped in with ordinary travel or subsistence, the bookkeeper may reclaim VAT on it by mistake. The policy should make entertainment its own category so it is coded correctly and the VAT left where it belongs.
Mileage and apportionment
For staff using their own vehicle, the policy ties mileage to HMRC’s Approved Mileage Allowance Payment rates: 45p per mile for the first 10,000 business miles in the tax year, then 25p, with a contemporaneous log. For phone and internet on personal contracts, it reimburses only the business proportion, which means an apportionment rather than the whole bill.
How to use the template
- Set your own accommodation caps and approval thresholds in place of the placeholders.
- Choose your subsistence approach, scale rates or actual cost, and state it.
- Confirm the mileage rate and the submission deadline.
- Circulate the policy and have staff acknowledge it, so an approver can point to an agreed rule when querying a claim.
Common mistakes
- Leaving entertainment uncategorised, so VAT gets reclaimed on it in error.
- Allowing scale rate and actual cost to be mixed for the same meal.
- Having no submission deadline, so stale claims land in the wrong period.
- Reimbursing whole personal phone bills rather than the business proportion.
When the policy enforces itself
A written policy only works if claims actually follow it. Tools that apply the rules at capture do the enforcing:
- Expensify flags out-of-policy claims as they are submitted.
- ExpenseFlow reads each receipt, codes it to the right category (keeping entertainment separate), applies the correct VAT treatment, and posts it into Xero or QuickBooks Online, so the policy is enforced in the coding rather than relying on every approver to remember it.
- Pleo sets card limits that match the policy before the spend happens.
Start from the template, set your limits, and let captured-at-source coding keep claims inside the policy.