Are Per Diems Taxable? A Simple Guide for UK Roadies
Per diems (PDs) are a regular part of touring life — a flat-rate daily payment to cover meals and day-to-day expenses. They’re not wages and not reimbursed receipts. But when it comes to UK residents and tax, where exactly do they sit?
That’s where opinions in the industry vary. But there is a right answer.
Some PDs need to be treated as taxable income. Others don’t.
And a lot of it depends on
How you’re paid
Who’s paying you
Whether you’re invoicing or not.
This blog covers the main questions UK-based freelancers ask (or should be asking) about PDs and tax. Whether you’re a sole trader or a limited company, VAT-registered or not, here’s what you need to know.
When do PDs become taxable?
PDs only become taxable when they start to look like extra income, rather than a genuine reimbursement for costs you’d reasonably incur while working.
If you’re getting £25–35 a day as a flat amount to cover meals, drinks, or small incidentals while touring — and that amount isn’t excessive — HMRC typically treats this as a legitimate subsistence payment. That means it doesn’t have to be taxed as income.
But:
If the amount is unusually high
If it’s clearly more than what you’d reasonably spend
If it’s paid in a way that looks like additional earnings
…it may need to be declared as taxable income.
👉 If you’re unsure, the safest rule is this: if the PD reasonably covers food and non-luxury daily costs, and nothing more, it’s probably non-taxable.
Do I need to invoice for PDs?
You don’t have to. Some companies prefer to send PDs without requiring an invoice. Others will specifically ask you to include them on an invoice, usually as a separate line item.
Here’s the difference:
If you don’t invoice for them, and they’re paid as a flat daily amount, they’re generally treated as a non-taxable reimbursement — not income.
If you do invoice for them, technically you’re declaring them as income, even if you’re just passing on the cost.
But even if you invoice for them, as long as the rate is sensible and it’s clearly marked as a PD (not a fee or rate), HMRC may still accept that it’s not taxable income — especially for sole traders.
⚠️ If you’re VAT-registered, invoicing brings complications (see below).
Does the amount I receive affect anything?
Yes — context matters. £25–35 a day is considered reasonable in most cases, especially if you’re working internationally. If someone’s paying you £75 or £100 per day in PDs, that’s when red flags go up.
Large or irregular PDs may look more like extra pay, and HMRC could classify them as taxable earnings unless there's justification or receipts.
There’s no official upper limit, but keep it in proportion to the actual costs of food and drink for a working day. If it looks like a backdoor bonus, it probably is in HMRC’s eyes.
Does it matter if I’m working abroad?
Not directly — what matters is who’s paying you and where they’re based.
If you’re paid by a UK company while working abroad: UK tax rules apply.
If you’re paid by a non-UK company: you may still be liable to UK tax, depending on your residency and the length of time abroad.
For short tours and freelance gigs, the money is usually taxed in the UK as normal. If you’re living and working abroad for long periods, or being taxed locally, get advice from an accountant.
Working outside the UK doesn’t automatically make the PD taxable or tax-free — the same general rules still apply.
Does being VAT-registered change anything?
Yes — if you’re VAT-registered and you invoice for PDs, you need to consider whether VAT applies.
If the PD is treated as income (e.g. it’s just included as part of your fee), you charge VAT as usual.
If it’s clearly marked as a reimbursement for subsistence and you’re not making a profit on it, then VAT may not be needed.
⚠️ HMRC’s guidance on this is murky. Technically, if you're supplying something (even if it's just passing on costs), it could fall within VAT rules.
If you’re not VAT-registered, this point is irrelevant — but still worth being aware of if you plan to register in future.
Does it matter if I’m a sole trader or limited company?
Yes — and here’s where it gets more nuanced.
Sole traders: You’re more likely to be treated as personally receiving the PD as a reimbursement. As long as the amount is fair and directly linked to the work, you usually don’t declare it as income.
Limited companies: HMRC expects everything that comes into your company to be declared, and you’d then treat the PD as an expense reimbursed to you by the company. It adds paperwork, and your company may need to run it through payroll or expense accounts correctly.
In both cases, if the PD is paid directly to you and not invoiced, it’s more likely to be considered a reimbursement and not income.
Common Questions About Per Diems and Tax
Do I need to keep receipts for food if I’m getting PDs?
No — not if the PD is treated as a flat-rate allowance. You only need receipts if you’re trying to claim VAT on the food (and it was bought in the UK).
Can I be paid in cash?
Yes, and this is still common. If you’re handed £30 cash on day one, that doesn’t automatically make it taxable — it still depends on the amount and purpose.
Should I include PDs in my self-assessment tax return?
If they were invoiced and treated as income, yes. If not invoiced, and clearly subsistence, no — but record them separately in case HMRC ever asks.
Final Thought: Keep It Clean, Keep It Clear
Per diems exist to keep things simple — so don’t overcomplicate them. Keep your amounts fair, record when and why you received them, and keep them separate from your main fee wherever possible.
The more it looks like a genuine meal allowance, the more HMRC is likely to treat it that way.
Do your own research.
This blog is based on my own research and the most up-to-date guidance I could find — but everyone’s setup is different, and HMRC can be unpredictable. If you're unsure how your PDs should be handled, always speak to a qualified professional. Better safe than sorting out a headache later. Always do additional research, this blog is simply meant as a guide.
