Drivers sleeping away from home incur real costs: food, parking, washing, a decent breakfast. The tax system recognises this through specific subsistence arrangements for lorry drivers, and both employers and drivers need to understand where the lines sit, because paying an allowance the wrong way can make it taxable wages.
HMRC’s Employment Income Manual sets it out. Under sections 289A and 289B of the Income Tax (Earnings and Pensions) Act 2003, subsistence allowances paid by an employer (or a third party) to a lorry driver are exempt from tax if they are paid in an approved way and two conditions are met:
Underneath all of this sits a basic rule: the payment must be no more than a reasonable reimbursement of accommodation and subsistence costs incurred on business travel, meaning travel in the performance of the job or to a temporary workplace. Ordinary commuting never qualifies.
There are two approved routes:
Since 6 April 2019, employers using benchmark scale rates no longer have to run a system checking employees’ actual expenditure. They must simply ensure the employee was genuinely undertaking qualifying travel on the occasions paid, and that nobody knows or suspects the travel did not happen. A checking system is still necessary for bespoke rates, which is where the lorry driver overnight allowance lives.
HMRC has agreed a standard industry rate for lorry drivers’ nights away in the UK: £34.90 per night, a figure that has stood since 1 January 2013. Because it is a bespoke rate, the employer needs an approval notice from HMRC, and the application must confirm a checking system is in place, with examples of the checks made. HMRC publishes model checking systems and the documentary evidence needed to support one. The approval notice lasts up to five years before renewal.
Where greater sums are paid, the excess can become taxable. And where the lorry has a sleeper cab, a separate rate applies; HMRC’s manual treats sleeper cab nights as their own category, so check the current sleeper cab rate rather than paying the full night out figure. Employers paying one flat rate regardless of cab type should check which rate each night actually attracts.
Salary sacrifice. The legislation expressly prevents subsistence expenses being paid or reimbursed under a salary sacrifice arrangement. An allowance carved out of sacrificed salary is not exempt; it is just wages with extra steps and a compliance problem attached.
Paying without qualifying travel. A night out allowance for a driver who went home is not exempt, whatever your payroll calls it. Since 2019 the obligation is simple: be sure the qualifying travel happened.
No checking system for the bespoke rate. The £34.90 rate is only available tax-free under an approval notice backed by real checks. Paying it with no approval notice and no checks turns a tidy arrangement into a PAYE settlement waiting to happen.
Treating the allowance as wages for other purposes. A properly exempt subsistence payment is a reimbursement, not earnings; confusing the two distorts holiday pay and minimum wage calculations.
If your employer pays within these arrangements, your night out money arrives tax-free and there is nothing to claim. If your employer pays nothing toward the costs of nights away, you may be able to claim tax relief yourself on the actual, evidenced expense of subsistence on qualifying journeys; keep receipts and records, because relief follows proof. Either way, the allowance is meant to cover real costs of being away, and the system’s checks exist to keep it honest.
Done properly, night out allowances are one of the few genuinely tax-efficient parts of a driver’s pay packet. Done casually, they are an HMRC enquiry with interest.