How can employers prepare ahead of the Benchmark and Overseas Scale Rates review?
As announced in the Government’s 2026 Tax Update, there will be a review of Benchmark Scale Rates (BSRs) and Overseas Scale Rates (OSRs) for travel expenses. The aim of the review is to assess whether current rates are appropriate in light of rising travel and subsistence costs and whether there is any scope to simplify the rules for employers and employees.
For employers that use BSRs and OSRs, the outcome of this review could result in changes to policies, reimbursement practices and payroll processes, both domestically and internationally.
What are Benchmark Scale Rates?
BSRs are flat-rate allowances that employers can use to reimburse their employees for the cost of meals when they travel for work in the UK. Instead of employees being required to submit a receipt for each meal, employers can pay fixed amounts where certain conditions are met.
Currently, the BSRs are:
- £5 for an employee who has travelled for at least 5 hours
- £10 for an employee who has travelled for at least 10 hours
- £25 for an employee who has travelled for at least 15 hours and continues beyond 8pm
- An additional £10 late-evening allowance in certain circumstances
These rates are regularly used by employers to reduce administrative burdens while providing employees with a tax-efficient reimbursement for qualifying travel expenses.
What are Overseas Scale Rates?
OSRs are similar to BSRs but can be used by employers to reimburse the cost of accommodation, meals and incidental expenses when employees travel overseas for work. The rates are variable dependent on the location the employee was working in and are created to reflect the differences in living costs in each country.
As with BSRs, OSRs can reduce administrative effort and are particularly relevant for businesses with employees who regularly travel internationally for client meetings and other overseas assignments.
Why are the rates being reviewed?
Following input from businesses, the Government has announced this review to explore whether the current rates are reflective of the current cost of travel and meals. They are also looking to determine whether the OSR framework could be simplified, potentially to better align with the approach used for BSRs.
How can employers prepare?
Despite the review still being at an early stage, employers can take practical steps now to understand how any future changes could affect their organisation:
- Review current travel and subsistence policies and reimbursement arrangements.
- Assess whether the existing rates and processes remain appropriate, competitive and aligned with employee expectations.
- Stay informed of announcements regarding the findings of the review and any subsequent proposed changes to BSRs and OSRs.
- Review how often BSRs are used across the organisation and whether current processes are operating effectively.
- Identify any overseas travel arrangements that may be affected if the OSR framework is revised or simplified.
- Consider whether current expense management systems and payroll processes could accommodate potential changes without significant disruption.
For many employers, scale rates provide a practical way to balance employee experience with administrative efficiency. Any changes to the rates or the underlying framework may have implications for travel policies, payroll compliance, budgeting and expense management processes.
Businesses with frequent domestic or international travel are therefore likely to benefit from understanding their current position ahead of any future reforms.
We’re here to help
Travel and subsistence expenses remain a complex area of employment tax, particularly where businesses have large mobile workforces or regular overseas travel.
If you would like some advice on reviewing your expense policies or have any questions regarding the review, please speak to a member of our specialist team or contact your usual Azets adviser.
