Guide
HGV Overnight Subsistence and the Sleeper-Cab Allowance
There is an agreed haulage industry scale rate for overnight subsistence, set out in HMRC's Employment Income Manual. It is a maximum an employer may pay an employee free of Income Tax and National Insurance, and it comes with conditions the employer has to meet.
Get the conditions right and it is a clean, simple way to cover a driver's costs. Get them wrong and the payments are earnings, with PAYE and National Insurance due on every one of them.
Last reviewed
Written by the HGV Accountants editorial team
- Who this is for
- Employed HGV drivers receiving night-out payments, and the operators who pay them.
- The problem
- The overnight rate is widely quoted as a tax free entitlement. It is neither automatic nor an entitlement, and the conditions sit with the employer rather than the driver.
The Amounts
£34.90
Standard overnight rate
Maximum payable free of tax and NICs per qualifying night.
£26.20
Where a sleeper cab is used
75% of the standard rate.
Both figures are maximums, not entitlements. An employer can pay less. An employer paying more is making a payment of earnings on the excess. Source: HMRC Employment Income Manual EIM66205.
The Conditions the Employer Must Meet
- 01Apply to HMRC for an approval notice to use the rate. This is not a formality that can be assumed because the rate is an industry one.
- 02Operate a checking system, carrying out periodic checks on a sample of employees to confirm that costs are genuinely being incurred.
- 03Satisfy itself that the payment remains a reasonable estimate of the costs usually incurred.
- 04Pay it only in respect of nights the driver genuinely spends away in the course of the work.
What the Sleeper Cab Reduction Is For
Where the vehicle has a sleeper cab and the driver uses it, the rate reduces to 75 per cent of the standard amount, because part of what the standard rate covers is the cost of a bed the driver no longer has to pay for. The reduced amount still recognises the meals and the other costs of being away.
This is a factual question about each night, not a category applied to a driver. A driver who normally uses the sleeper but genuinely stays elsewhere on a particular night is in a different position for that night, which is one of the things a checking system should surface.
Employed and Self-Employed Are Not the Same Claim
| Employed HGV driver | Self-employed HGV owner-driver | |
|---|---|---|
| What the rate is | An amount an employer may pay free of tax under an approval notice | Not available. The rate is an employment payment |
| Who claims | The employer pays it. The driver receives it | The trader deducts a business expense |
| What is deducted | Nothing, if the employer has already paid it free of tax | The subsistence cost actually incurred while working away |
| Evidence needed | The employer's checking records | The trader's own receipts and records |
| Where it goes | Nowhere. It is already handled through payroll | Against trading profit in the accounts and on the tax return |
Common Questions
Is the HGV night-out allowance tax free?
It can be paid free of Income Tax and National Insurance up to £34.90 per night, or £26.20 where a sleeper cab is used, but only where the employer holds an approval notice from HMRC and operates a checking system. Without those, the payment is earnings and is taxable.
Can I claim the night-out rate if my employer does not pay it?
You cannot claim the scale rate itself, because it is an employer payment rather than a deduction. Where you are obliged to stay away, actually incur costs and your employer reimburses nothing, employment expenses relief may be available on what you spent. It requires records, and it is a different and usually smaller claim than the rate.
Does the rate cover a weekend away or just a night?
It is a nightly rate for qualifying nights spent away in the course of the work. A longer trip is a number of qualifying nights rather than a separate category, and each of them has to meet the same test.
I am a self-employed owner-driver. Can I use the rate?
No. The rate is an amount an employer may pay an employee. A sole trader is not an employee of anybody. You deduct the subsistence you actually incur while working away, where it meets the test for business expenses, and you keep the records to support it.
Related Guides
- HGV Payroll and AllowancesPAYE, employer costs, night-out payments and the conditions attached to paying them free of tax.
- HGV Employment StatusWhat actually decides status for a driver, and why owning the vehicle changes the answer.
- CIS and HaulageDelivering materials is generally outside CIS. Working on the site is where it changes.
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