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Expenses policy guidelines

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Guidelines: Expenses

Below are some guidelines for writing an expenses policy, designed for a small not-for-profit employer that is adhering to statutory minimum requirements. It does not constitute legal advice. This resource has been provided by HR Services, an NCVO Trusted Supplier. As with all policies it should be consistent with your terms and conditions of employment as well as your culture and aspirations. There is no one-size-fits-all.

Download a version of these guidelines for writing an expenses policy (Word, 73KB)

Members can also download a template policy from our financial procedures manual templates.

Employers have different rules and expectations about incurring expenses. These guidelines may help small charities to consider the factors when drafting an expense policy. There are separate considerations for expenses paid to trustees or volunteers.

Being clear about your expectations will help staff know what they can claim and may avoid misunderstandings or disagreements. The following questions/points may act as a guide to the areas you need cover.

The scope of the policy

  • Who does the policy apply to?
  • Are all staff allowed to claim expenses? 
  • Explain what 'expenses' are. For example, 'actual costs that have arisen because they are necessary to do the job properly’.
  • What expenses are reimbursed under the policy? For example, travel, taxis, meals, accommodation, work entertainment, and so on but not gifts or staff parties.
  • Expenses that will not be reimbursed - what might these be? For example, the cost of travel between home and work, any personal travel, cost of travel for partner and any fines or penalties incurred and so on.

Initial questions to consider to claim expenses

  • Is there an expenses claim form? If so, where is it kept?
  • When and how will expenses claims be paid?
  • What are the rules around the timing of making expense claims? For example, should they be submitted by a set date in the month? If you need expenses by a set date to report to funders, are you able to reimburse expenses if they are submitted late?
  • Are there rules on the completion of the expense form? For example, expense claim forms must be signed, dated and receipts attached (other than for mileage claims). Would you accept a credit/debit card statements if the receipt is mislaid? 
  • Do you want to set limits on expenses that can be claimed? For example second class rail travel, taxi travel is only allowed in certain circumstances. 
  • Do you provide credit cards? If so, are these to specific individuals or levels of staff? Explain any restrictions around the use of the card such as no personal expenditure.
  • If staff are working from home, are they able to claim for materials that office-based staff would have supplied (for example stationery and printing)?
  • Data protection: Ensure that you are clear about what personal information will be processed and how it will be stored. For more information, see our guidance on data protection and cybersecurity.

Travel expenses

  • Are employees encouraged to consider alternatives to travel such as teleconferences or online conferences for example?
  • For city-based charities with travelcards, what expenses can be claimed where staff have their own travelcard and travel in working hours?
  • Are employees required to travel in standard class? Should travel be booked as far in advance as possible to take advantage of any early booking discounts? Do you have an appointed travel agency? If so, include details of what information they will need to book. Are staff asked to minimise cost by using personal railcards for work travel, where possible? If employees have a season ticket loan as part of their employment, how will this be managed?
  • Is air travel relevant? If so, are employees required to travel in economy class? Should travel be booked as far in advance as possible to take advantage of any lower fare? Do you have an appointed travel agency? If so, include details of what information they will need to book. Are staff asked to minimise cost by using personal air miles for work travel?
  • If employees can take taxis, under what circumstances? Highlight that a receipt must still be obtained, showing the date, place of departure and destination of the journey.
  • Will you reimburse travel late at night or early in the morning because normal transport is unavailable? For example, they may have to take a taxi as opposed to a train. If so, what would constitute ‘late’ and ‘early’?
  • Highlight that no reimbursement will be made for travel to or from social events. Should authorisation be sought and, if so, who from?

Employees who use their own or hire a car

  • Under what circumstance can an employee use their own car or a hire car instead of using public transport? Highlight that this is subject to the employee holding a full UK driving licence, having an in-date MOT certificate, the car being taxed, and motor insurance that includes business use being in force.
  • Do you need the employee to bring in evidence of insurance etc?
  • Must prior authorisation be sought before an employee uses their car? What will you pay for, and not pay for? Is it usual to pay for an MOT, parking fines or speeding fines?
  • Is it usual to refund road tolls, congestion charges, an element of insurance for business use and parking costs? What rate per mile can be claimed? Highlight that the charity accepts no liability for any accident, loss, damage or claim arising out of any journey that the employee makes on business, unless this is caused by the organisation’s negligence.

Travel overseas

  • Will meals and hotel allowances apply overseas? What currency exchange rate should be used?
  • Will the organisation provide business travel insurance? Will the organisation reimburse for any travel/visa or inoculations if required?
  • Is it the employee’s responsibility to ensure that they have a passport, with at least six months remaining before the expiry date?

Meals and accommodation

  • What are the guidelines for booking accommodation (for example 3 star or less, Premier Inn/Travel Lodge or equivalent)?
  • What is the maximum cost that can be claimed, and does this increase when the overnight stay is in a city? Highlight who will bear the responsibility for cancelling the hotel if needed.
  • What are the limits claiming for breakfast, lunch and dinner? Can these meals be claimed in any circumstance even if the employee has not stayed away (for example if the day began before 06.00 then can breakfast be claimed)? Do these amounts include drinks?
  • Can alcoholic drinks be claimed? Do these limits apply if the employee incurs these expenses whilst entertaining on behalf of the charity?

Handling false claims

  • Highlight that you may request further evidence of any expenses claim and will not reimburse if it is unavailable. 
  • Explain that claims for disallowed expenses, for personal gain, hospitality/gifts etc are a misuse of the policy. 
  • Explain that misuse of expenses may lead to disciplinary action up to gross misconduct.

HR Services Partnership

HR Services Partnership can help you draft a policy or procedure which is specific to your organisation. As an NCVO Trusted Supplier, we offer preferential rates for members of NCVO. Contact HR Services Partnership to find out more

Download a version of these guidelines for writing an expenses policy (Word, 73KB)

Page last edited May 17, 2022

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