Expenses Clauses in Employment Contracts

Expenses clauses define which business costs employees can claim back and the process for reimbursement.

Basic Expenses Clause

Standard Clause

"The Company will reimburse you for reasonable business expenses properly incurred in the performance of your duties. All expenses must be claimed in accordance with the Company's Expenses Policy, with appropriate receipts and approvals."

Policy Reference

"Details of claimable expenses, limits, and procedures are set out in the Expenses Policy, available from [HR/intranet]. The Expenses Policy does not form part of your contract and may be amended from time to time."

Types of Claimable Expenses

Travel Expenses

"Business travel expenses may be claimed, including:

• Rail fares (standard class unless otherwise approved)
• Mileage at [HMRC approved rates / company rates]
• Parking fees
• Taxi fares (where public transport not practical)
• Air travel (economy class unless pre-approved)"

Accommodation

"Where overnight stays are necessary for business:

• Hotel accommodation up to £[X] per night in London, £[Y] elsewhere
• Evening meal allowance up to £[X]
• Incidentals allowance up to £[X] per night"

Subsistence

"Meal expenses while working away from normal place of work:

• Breakfast (if leaving before 6am): up to £[X]
• Lunch (if working through): up to £[X]
• Dinner (if returning after 8pm): up to £[X]"

Equipment and Materials

"Reasonable costs for equipment, materials, or services required for your work, where pre-approved by your manager."

Mileage Rates

HMRC Approved Rates

Vehicle	First 10,000 miles	Over 10,000 miles
Cars	45p per mile	25p per mile
Motorcycles	24p per mile	24p per mile
Bicycles	20p per mile	20p per mile

Company Rates

"Business mileage in your own vehicle will be reimbursed at:

• [45p per mile / company rate] for the first 10,000 miles
• [25p per mile / company rate] thereafter You must maintain valid insurance covering business use."

Claim Procedures

Submission Process

"Expense claims must be:

• Submitted within [30 days / by month-end] of being incurred
• Supported by original itemized receipts
• Categorized according to expense type
• Approved by your line manager
• Submitted via [system/form]"

Late Claims

"Claims submitted after [deadline] may not be reimbursed. Exceptions may be made in exceptional circumstances with management approval."

Payment Timeline

"Approved expense claims will be reimbursed within [14 days / next payroll], subject to the payment method chosen."

Approval Requirements

Pre-Approval

"The following expenses require pre-approval before being incurred:

• Overseas travel
• Air travel
• Accommodation over £[X]
• Any single item over £[X]
• Client entertainment"

Manager Approval

"All expense claims must be approved by your line manager or a more senior manager. Claims from managers must be approved by their line manager or Finance."

Corporate Cards

Card Provision

"If provided with a corporate credit card:

• The card must only be used for business expenses
• Personal use is prohibited
• Receipts must be retained for all transactions
• Monthly reconciliation is required
• The card must be returned on termination"

Misuse

"Misuse of corporate cards, including personal use, may result in disciplinary action and may be treated as gross misconduct."

Entertainment Expenses

Client Entertainment

"Client entertainment expenses may be claimed where:

• There is a genuine business purpose
• Pre-approval has been obtained where required
• Expenses are reasonable and appropriate
• Proper records are kept including attendees and business purpose"

Limits

"Entertainment expenses are subject to the following limits:

• Working lunch: £[X] per head
• Client dinner: £[X] per head
• Annual client entertainment: £[X] per client"

Non-Reimbursable Expenses

Exclusions

"The following are not claimable as business expenses:

• Personal items and clothing
• Fines and penalties
• Commuting costs (home to normal workplace)
• Personal telephone calls
• Alcohol (except where approved for entertainment)
• Gym or leisure activities
• Childcare costs
• Newspapers or magazines"

Tax Implications

Tax-Free Reimbursement

"Expenses reimbursed in accordance with HMRC rules are not taxable. However, amounts exceeding approved rates or personal benefits may be subject to tax. The Company will report any taxable benefits on your P11D."

Benchmark Rates

"Where benchmark meal allowances are paid without receipts, they are tax-free up to HMRC scale rates. Amounts above scale rates may be taxable."

Fraud and Abuse

Consequences

"Fraudulent expense claims, including falsifying receipts, claiming personal expenses as business, or claiming expenses not incurred, will be treated as gross misconduct and may result in summary dismissal. The Company may recover fraudulent amounts and report to police where appropriate."

Audit Rights

"The Company reserves the right to audit expense claims at any time. Employees must retain supporting documentation and cooperate with any expense audit."

Best Practice

For Employees

1. Keep all receipts
2. Submit claims promptly
3. Be honest and accurate
4. Follow the policy
5. Get pre-approval where needed
6. Query limits before incurring expenses