Fuel, drivers’ time, and route adjustments can make transport spending hard to control unless rules are clear and visible. Logistics costs can account for up to 30 per cent of delivery costs, with fuel and delays ranking among the top challenges for UK carriers. This guide explains what an expense policy is, why it matters, where it applies, common mistakes in UK fleets, and practical fixes that work on the road and in the ledger.
Key takeaways
- Keep rules short, specific, and tied to business purposes so employees know what to pay for, when to claim, and how to record the journey.
- Use virtual cards and a single expense system to tag spend by vehicle, route, and customer, then post to payroll or accounts without retyping.
- Treat business travel like any other controlled process: set limits, state when taxi journeys are allowed, and define what counts as exceptional circumstances.
- Build tax and national insurance guidance into the policy so employees avoid benefits in kind, and payroll can process what is payable and what is reimbursed.
- Review mileage claims, subsistence expenses, and overnight accommodation monthly and compare journeys claimed to route plans to cut additional costs.
What is an expense policy?
An expense policy is a written set of rules that explains how employees pay for work costs, what the company will reimburse, and how claims flow into the accounts. It covers business travel, meals, rail travel, public transport, taxi use, and other expenses that keep work moving. The policy applies to drivers, depot staff, office teams, contractors on official business, and non-executive directors who travel on company work. It also explains how to use the expense claim form, how to attach receipts, and how to handle any expense claim that does not match the rules.
A good policy tells an employee how to arrange a journey, how to pay at the pump or ticket desk, and how to record the costs incurred. It sets out what is cost-effective for a route, which travel cards are allowed, and when first class or business class is out of scope. It also explains what is taxable, when national insurance applies, and when a payment goes through payroll. The result is a steady process that protects value without slowing the business.
Further Reading: The Complete Guide to Managing Expenses for Transport & Logistics Companies
Why does your company need an expense policy?
Transport companies deal with frequent, small payments that add up quickly. Without clear rules, expenses incurred across depots and routes turn into overdue entries and messy totals. A policy sets key principles that keep spending fair and consistent and that help managers pay suppliers and reimburse employees on time. When drivers know which card to use, which receipt is required, and which journey counts as business travel, you get fewer disputes and faster posting.
There is also a tax angle. HMRC rules decide what goes through payroll, what is subject to tax and national insurance, and what can be reimbursed without deductions. If the policy shows where tax applies, the employee is less likely to make expense claims that create an unwanted liability. The company can then pay what is due and avoid penalties. Clear instructions also reduce the risk that an employee becomes personally liable for a payment that falls outside the policy.
What is the scope of the policy?
Scope explains who the rules cover, where they apply, and which spending types are in scope. In transport this includes drivers, planners, operations teams, on-site engineers, and employees who join business journeys for training or customer meetings. The scope covers business use of vehicles, rail travel, public transport, taxis, and fuel for a personal vehicle when it is used for business purposes. It also includes overnight accommodation, meals on long routes, and incidental expenses when a shift extends past six hours.
The scope must also spell out what falls outside the rules. Personal travel, parking fines, and congestion charges incurred on private detours are not payable by the company. Journeys that start or finish at the employee’s home may count as private unless the trip meets business travel tests. The policy should deal with certain circumstances, such as emergency call-outs or last-minute diversions, and it should show how to log such claims without breaking tax or national insurance rules.
What is the strategy behind an expense policy?
The strategy is to keep people safe, keep spend visible, and keep records tidy so the company can demonstrate cost-effectiveness. In practice that means a single expense system, a standard expense claim process, and simple payment tools that work across depots and routes. It also means using virtual cards or named cards where possible, so credit controls are strong and values are tagged at source. When the process is easy to follow, employees pay correctly, claims arrive on time, and managers get a live view of costs.
Transport firms benefit from tagging every journey to a vehicle, a lane, a depot, or a customer. When routes shift, you still know which costs belong in which report. For example, if rail travel replaces a van for a day, the ticket is booked under the same job code. When the expense is reimbursed, the ledger shows the right value in the right place. This strategy supports cost-effective planning because you can compare like-for-like and track the environmental impact of choices across the year.
Further Reading: How to Build an Expense Policy That Actually Works
Key principles of expense policy
Key principles keep the rules short and strong. Each principle should be easy to check and suitable for the UK market.
- Spend for business purposes only. If a journey is private, it is not payable and must not be claimed.
- Choose the most cost-effective option that meets safety and timing needs. That may be rail travel off-peak, public transport with travel cards, or a taxi for late arrivals to a remote depot.
- Record expenses on the dayusing the expense system. Upload receipts and record journey details before the next shift.
- Follow tax and national insurance guidance. The policy explains when a payment is taxable and when it can be reimbursed without deductions.
- Use company cards where issued. Avoid cash unless the depot lead authorises it in exceptional circumstances.
- Protect the environment. Use public transport where it fits the route, share vehicles where safe, and track greenhouse gas emissions for regular lanes to support better planning.
Policy expectations and requirements
Your policy must set expectations in simple terms. Employees need to know how to book, how to pay, and how to claim. Managers need to know how to approve and how to reject. Payroll needs clear data on tax and national insurance so amounts are paid and reported correctly.
Expense policy requirements
The policy should require employees to provide specific details when submitting claims and bookings:
- Expense claim details: journey date, start point, destination, purpose of the trip, and the vehicle or lane used.
- Receipts: must show the supplier, the value, the VAT where relevant, and the last four digits of the card used.
- Mileage claims: if a personal vehicle is used, the employee should submit mileage claims that include the route and distance.
- Subsistence expenses: if allowed, the policy must define the daily limits and the times of day they apply.
- Overnight accommodation: should be pre-approved and booked through the company process, unless an incident forces a change.
Limitations and conditions of the policy
Limitations protect the company from unnecessary costs. First class and business class travel are not allowed unless the managing director approves in writing, and then only in certain circumstances where work requirements demand it. Taxi journeys are allowed late at night, for heavy equipment, or where safety is in question; taxis should not replace frequent public transport for short hops. Oyster cards and other travel cards can be used for regular city routes where they are cost-effective. All bookings should be made through the company process where required, so rates and credit limits are applied consistently.
How to deal with expense claims, receipts, and bookings
A smooth claim flow keeps drivers focused on deliveries. Use one expense system that collects claims from phone or laptop, supports digital receipts, and posts to accounts and payroll on a daily cycle. Make the expense claim form short and stable so employees learn it once and stop making entry errors. For booked tickets, keep the booking reference with the claim so audit checks are quick. If tickets were booked in advance, add the original plan and note any additional cost from a route change.
To keep the ground rules simple:
- Submission deadlines: expense claims should be submitted within five working days. Claims older than one month require manager approval with reasons.
- Mileage: if an employee used a personal motor vehicle or a personal vehicle for official business, mileage claims should follow HMRC rates and rules, with full route and distance details recorded.
- Receipts: if a receipt is missing, allow one claim per quarter with a written note; tighten controls if such claims increase.
- Tax and payroll checks: where a claim would breach tax rules, payroll must classify it correctly so tax and national insurance are handled on time and the employee is not personally liable later.
Further Reading: Top Ways to Streamline Expense Management Across Transport and Logistics
Top expense policy mistakes you should be aware of
Transport companies face a familiar set of pitfalls. These mistakes raise costs, slow reimbursement, and trigger tax and national insurance issues.
- Mixing private and business journeys
Claims start from the employee’s home without checking whether the trip qualifies as business travel.
- Loose taxi rules
Taxis are used as a default when public transport would be faster and cheaper.
- Weak rail guidance
Rail travel is booked late or at peak time without a valid reason, and travel cards that reduce cost are ignored.
- Missing receipts
Expenses incurred are not backed by documents, so payroll cannot classify tax correctly and the claim is delayed.
- Unclear approval chains
Claims sit for days because managers are not sure who should sign off.
- No mileage structure
Mileage claims do not match routes, limits, or vehicle logs, and claiming mileage becomes guesswork.
- Overclaiming meals
Subsistence expenses exceed limits or duplicate a provided meal.
- Poor card controls
Shared credit cards are used across depots, and the company cannot match costs to journeys claimed.
- No exception path.
Exceptional circumstances, such as breakdowns, trigger ad hoc payments that are later hard to reconcile.
- Weak tax notes
Employees and managers do not know when a payment is taxable, so payroll has to fix errors after the fact.
How to fix typical expense policy mistakes
Fixes work best when they are small, direct, and easy to use on a busy day.
- Separate private and business use
Make clear how HMRC defines business travel. Journeys from the employee’s home to their usual depot or office count as ordinary commuting and cannot be claimed. Travel to a temporary workplace, such as a customer site or training location, qualifies as business if it is for less than 24 months. The trip must be wholly for work purposes, so private detours are excluded. Add two short examples on the policy page to show when a trip from home is valid, and always require the destination, purpose, and customer or lane on every claim.
- Set taxi rules by time and safety
State when taxis are allowed and when public transport is expected. For late arrivals, heavy equipment, or isolated depots, taxi journeys are fine. For city centre hops with frequent buses and trains, taxis should be avoided. Where taxis are required, remind employees to request a receipt with time, place, and fare.
- Tighten rail and bus guidance
Say how to book rail travel and public transport. Where off-peak fares or travel cards are cheaper and still meet work timings, use them. If rail travel is booked at short notice because a job changed, add a short note to the claim so approvers see why it was required. For London routes, Oyster cards can be used when they are cost-effective and backed by a download of trips.
- Make receipts easy
Allow photo uploads from a phone at point of purchase. If a receipt is lost, allow one claim per quarter without it, but require a manager note. For fuel and meals, remind employees to ask for VAT receipts so payroll can apply tax rules correctly.
- Fix approvals with routing and targets
Route claims to the depot lead for first review, then to finance for tax checks. Set a target of two working days for approvals and display status on the claim page. If items are held because of missing data, the employee gets a prompt that shows exactly what is required.
- Control mileage and mixed vehicle use
Define rates, set limits for typical lanes, and require a map or log for long claims. Where a personal vehicle is used, cap mileage per day and require a reason. If the company provides a van or a pool car, mileage for those journeys should not be claimed.
- Keep meals and hotels sensible
Limit subsistence expenses by time bands and cap overnight accommodation by city. If the shift extends past six hours, a modest meal allowance can apply. Breakfast or dinner should not be claimed when already provided by a hotel or a customer event. The policy page should show examples of acceptable costs.
- Move to tagged cards
Replace shared credit cards with virtual cards named for lanes, vehicles, or teams. Set limits that reflect typical fills and tickets.
- Create a simple exception path
When a route fails or weather closes a road, allow a quick phone approval and log the reason. These entries are reviewed weekly, so costs incurred in exceptional circumstances do not get lost.
- Write tax notes where people look
Put short tax and national insurance notes under the claim fields that trigger them. People learn by seeing the rule at the moment of payment or claim, not on a distant policy page.
Further Reading: How Virtual Cards Can Slash Fuel and Route Expenses in Logistics
How Wallester can help
Wallester Business gives companies the ability to issue and manage payment cards instantly, with strong controls and live reporting. For transport firms, this means less time chasing receipts and more time keeping vehicles moving.
- Issue virtual Visa cards in under a minute for drivers, teams, depots, or specific routes, with daily or per-transaction limits.
- Restrict cards to approved merchants such as fuel stations, tolls, or ticket offices.
- See every payment in real time, tagged automatically to the right cost centre in your expense system.
- Add cards to Apple Pay, Google Pay, or Samsung Pay so drivers can pay at the pump or at kiosks without handling plastic.
- Pause or replace cards instantly if they are compromised or no longer needed.
- Export data daily or connect through APIs to your ledger and payroll, keeping tax and national insurance records correct.
- Use multi-currency support to keep cross-border transactions separate and reporting clear.
- Rely on Visa security standards and PCI DSS compliance for safe payments.
Managers value how quickly they can act. A new card can be issued during a shift, a limit raised for one journey, or a card closed once the work is complete. Alerts are simple and useful, giving finance the information they need without noise.
Open a Wallester Business account and issue cards for your next route. You’ll have live cost control from the start, cleaner reporting, and less friction between drivers, depots, and finance.
