Per diem

Accommodation and subsistence (meals) payments paid as fixed daily amounts are described as "scale rate expenses payments" by HM Revenue & Customs (HMRC). HMRC guidance does not use the term "per diem",[1] but it is used by some organisations.[2] HMRC allows scale rate expenses payments for income tax purposes for travel within the UK,[3] and allows a dispensation for such payments for travel abroad.[1]

U.S. companies and organizations use the per diem rate guide published by the General Services Administration which provides rates for a number of cities in the Continental United States.[4] For locations in the US outside the continental US, including Alaska, Hawaii and the US territories and possessions, per Diem rates are published by the Per Diem, Travel and Transportation Allowance Committee (also known as the Per Diem Committee or PDTATAC). For all foreign locations, per Diem rates are established by the Department of State.

Per diem is understood to include the additional expenses incurred living away from home—basically the need to have two residences.[5] The GSA establishes per diem rates within the Continental United States for hotels "based upon contractor-provided average daily rate (ADR) data of fire-safe properties in the local lodging industry";[6] this means that per diem varies depending on the location of the hotel—for instance, New York City has a higher rate than Gadsden, Alabama.[7]

To qualify for a per diem, work-related business activity generally requires an overnight stay. The IRS code does not specify a number of miles. However, based on case precedent and IRS rulings, it is commonly accepted that an overnight stay must genuinely be required and actually occurs, to justify payment of per diem allowance.[8] The purpose of the per diem payment (or the deduction of expenses when inadequate reimbursements are provided) is to alleviate the burden on taxpayers whose business or employment travel creates duplicated expenses.

The US military pays its members per diem in accordance with the Joint Travel Regulations.[9] According to these regulations, the first and last days of travel are paid 75% of the daily General Services Administration, PDTATAC, or DOS rate, while all other days of travel receive the full rate.[10] The JTR also states that lodging taxes for CONUS and non foreign OCONUS are a reimbursable expense but requires a receipt.[11] The JTR also follows the 'expenses below $75 do not require a receipt' rule, established by the Internal Revenue Service although local disbursing officers may question charges they feel may be false.

The US Government also allows federal employees to purchase a home at the temporary duty location and claim the allowable expenses of: mortgage interest, property taxes and utility costs actually incurred.[12]

In addition, truck drivers have a special way of calculating a tax deduction for per diem. All drivers who are subject to USDOT hours of service are eligible. As of October 1, 2009, the per diem rate is $59 per day, and they may deduct 80% of this amount from their taxable income.[13]

Due to the large number of away games and associated travel days in American sports, per diem rates are often major components in collective bargaining agreements between leagues and their players' unions. As of 2016, the NBA has the highest per-diem for players at $115 per day, followed by the NHL whose per-diem began at a base of $100/day in 2012–13 and is adjusted each year based on changes in the US Consumer Price Index. Minor pro and collegiate athletes also receive meal money for overnight trips, usually paid as a rate set by the league or university they are affiliated with. As athlete salaries have risen, per diems have occasionally become a contentious issue when negotiating CBAs: for instance, in 2016 Major League Baseball slashed allowances from $100/day to $35/day, citing high salaries and teams now providing pre- and post-game food to players on the road as their rationale.[14]