Guide
HGV Payroll and Driver Allowances
Taking on a driver turns an owner-driver into an employer, with obligations that start on the first payday rather than at the year end. Most of it is routine. The part that is specific to haulage is the allowances.
Night-out money, tramping allowances and weekend payments are all earnings unless something specific makes them otherwise, and the thing that makes them otherwise has conditions attached that the employer, not the driver, has to meet.
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Written by the HGV Accountants editorial team
- Who this is for
- Haulage operators and small fleets employing HGV drivers, including operators taking on their first driver.
- The problem
- Driver pay is rarely just a wage. It is a wage plus night-out money plus a bonus plus something for the weekend, and the parts that are not the wage are where the payroll problems live.
What Employing a Driver Brings
- PAYE registration and real time reporting to HMRC on or before each payday.
- Employer National Insurance on top of the wage, which is a real cost of the driver and belongs in your cost per mile.
- Automatic enrolment into a workplace pension, with employer contributions, unless the driver opts out after being enrolled.
- Statutory payments where they arise, including sick pay and holiday pay.
- Employer's liability insurance.
- Correct treatment of every payment that is not basic pay, which is the part covered below.
Night-Out and Tramping Payments
There is an agreed haulage industry scale rate for overnight subsistence, with a reduced amount where the driver uses a sleeper cab. It can be paid free of Income Tax and National Insurance, but only where the employer meets HMRC's conditions.
- 01The employer applies to HMRC for an approval notice to use the rate.
- 02The employer operates a checking system, carrying out periodic checks on a sample of employees to confirm that costs are genuinely being incurred.
- 03The payment remains a reasonable estimate of the costs actually incurred.
- 04The driver is genuinely staying away in the course of the work.
Payments That Are Always Earnings
| Payment | Treatment |
|---|---|
| Cash handed over with the payslip for nights out, with no approval notice | Earnings. PAYE and National Insurance due. |
| A bonus for hitting a delivery target | Earnings. |
| A weekend or bank holiday premium | Earnings. |
| A retention or loyalty payment | Earnings. |
| Payment for a driver's own vehicle used to get to a yard | Depends on the journey. Ordinary commuting is not business travel. |
| Reimbursement of a cost the driver had to incur for the job, evidenced | Not earnings where it meets the rules for expenses reimbursed. |
Agency and Subcontracted Drivers
Where drivers come through an agency, the agency generally operates PAYE and your obligation is commercial rather than payroll. Where you engage a driver directly as self-employed, or through their own company, the status question is yours to answer and the risk sits with you. The employment status guide sets out what actually decides it.
A driver who turns up to your yard, drives your vehicle on your operator licence, to your schedule, with no vehicle of their own and no financial risk, is difficult to sustain as self-employed regardless of what the paperwork says.
Common Questions
Do I need an approval notice to pay night-out money?
To pay the agreed industry scale rate free of tax and National Insurance, yes. The employer applies to HMRC for the approval notice and has to operate a checking system alongside it. Paying the rate without that in place means the payment is earnings.
Can I pay a driver's night-out money in cash?
How it is handed over does not change what it is. If the approval and checking conditions are met, the payment can be free of tax and should still be recorded. If they are not met, it is earnings and it belongs on the payroll, in cash or otherwise.
Does the sleeper cab reduction apply if the driver sometimes uses a hotel?
The reduced rate applies where the driver uses a sleeper cab. Where a driver genuinely stays elsewhere, the standard rate may apply to that night. This is exactly the kind of variation the checking system is supposed to pick up, and it is why records of where drivers actually stayed matter.
I only have one driver. Do I still need a workplace pension?
Yes. Automatic enrolment duties apply from the moment you have one member of staff who meets the criteria. There is no small employer exemption, and the duties include enrolling, contributing and completing a declaration of compliance.
Related Guides
- Overnight SubsistenceThe night-out rate, the sleeper cab reduction, and the conditions that make it free of tax.
- HGV Employment StatusWhat actually decides status for a driver, and why owning the vehicle changes the answer.
- One Truck to a Small FleetThe second truck changes the licence, the balance sheet, the payroll and the cash cycle at once.
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