The first time someone explained the HMRC night-out allowance properly, I'd been tramping for three years. Flat rate from the agency — £25 a night, non-negotiable, "that's what we pay" — and I'd called it fine because at least it was something. Turned out HMRC had decided lorry drivers deserve £34.90. Nobody at the agency had mentioned this.
That gap between £25 and £34.90 matters. Five-night week — that's nearly fifty quid. Over a year of regular tramping, it's more than two thousand pounds of subsistence you're not getting covered. For a lot of agency drivers it stays that way, because nobody explains how the rate works and agencies aren't rushing to bring it up.
What the benchmark rate actually is
HMRC operates an agreed industry scale rate for lorry driver overnight subsistence. It's been £34.90 per night since 1 January 2013 — that's the amount your employer can pay you, free of income tax and National Insurance contributions, when you're away from your normal home base overnight for work. No receipts required for each coffee and service station sandwich. The rate covers it as a flat benchmark.
There's a specific provision for the sleeper cab. If you're taking your daily rest in the cab — not booking digs, not in a Travelodge, just putting the bunk down at Lymm or DIRFT or wherever you've parked — the rate drops to £26.20 per night. That's 75% of the full rate. HMRC's position is that the cab provides accommodation, so your out-of-pocket costs are lower than someone staying in a guest house.
Some nights that's fair enough. Some nights you're on a lay-by near Stafford with £1.40 coffee from a van and a dodgy phone signal, and £26.20 doesn't feel like a recognition of the job.
How the tax-free payment works in practice
The £34.90 isn't something you automatically receive — it's the maximum your employer can pay you free of tax and NI. What that means:
- Payments up to £34.90 per night (or £26.20 in the cab) fall outside the PAYE and NI system. No deductions.
- Payments above £34.90 are taxable unless the employer can evidence to HMRC that you actually spent more than that — receipts, hotel bills, that kind of thing.
- If your employer pays less than £34.90, you may be able to claim the shortfall as a tax-deductible expense via self-assessment, depending on your employment status.
The employer side has conditions too. To use the HMRC industry scale rate, your employer needs to hold an approval notice from HMRC for the rate, and they need to run a checking system — something that confirms you were genuinely away overnight. Route plans, delivery notes, tachograph records. Most operators with tramping drivers have all of this already. The ones not using the rate formally are usually just unaware it exists.
Why agency drivers miss out — and the umbrella problem
Agency work makes this complicated. When you're placed with a hirer through an umbrella company, the payment chain gets longer and the night-out allowance can get squeezed at multiple points.
Here's the one I've seen most often: the umbrella company treats the subsistence payment as part of your total package rather than as a reimbursement on top of your rate. So if you're quoted £17 an hour gross and you're doing nights out, the umbrella structures it as: some of that £17 gets reclassified as subsistence allowance, which reduces their employer NI liability, and what you see in your hand looks broadly the same — but the split between pay and subsistence isn't transparent.
Not every umbrella does this. But it's common enough that it's worth asking the question directly before you sign up: is the night-out allowance paid in addition to my hourly rate, or is it included within it? What rate are you paying per night? If you can't get a straight answer, that's usually the answer.
The other version is simpler and uglier — the umbrella just pays a flat rate below £34.90 and keeps the rest of the approved allowance as margin. Nothing illegal about that in isolation. But if the arrangement means the driver is bearing accommodation costs out of their own taxed pay rather than through the subsistence mechanism, something has gone wrong in the chain.
What the rate covers
The HMRC industry scale rate covers subsistence — food, drink, incidental costs of being away from home overnight. It doesn't cover fuel, ferry tickets, overnight car park fees, or vehicle maintenance. Those are separate business expenses.
What it does implicitly cover is the general cost of feeding yourself and living out of a cab for a night: service station meals, truck stop showers (where they charge), laundry costs over a longer trip. You don't need to itemise. The benchmark rate is an agreed amount that covers a reasonable overnight stay. Keep your own record of nights out — date, location, route — in case of any query, but you don't need a receipt for every sandwich.
If you're directly employed on PAYE
Straightforward. If your employer is paying the correct rate — £34.90 for digs or hotel, £26.20 in the cab — and they've got HMRC's approval notice in place, the amounts you receive tax-free. You'll see it on your payslip separately from basic pay, usually labelled something like "subsistence" or "night-out allowance."
If they're not paying it at all and you're covering your own overnight costs, you may have a claim via HMRC's expenses route. Worth looking at if you've been doing nights out for a year or more — the amounts aren't trivial.
If they're paying less than the HMRC rate — say, £20 or £25 a night — you could potentially claim the difference via self-assessment. HMRC allows employees to claim tax relief on genuine expenses not reimbursed by their employer, subject to the conditions. Might be worth a conversation with an accountant.
If you're sole trader or running a limited company
The employer-payment framework doesn't apply to you in the same way. But HMRC recognises subsistence as a legitimate business expense for self-employed people, and you can claim reasonable overnight costs when you're genuinely away from your base on business.
The benchmark rate isn't formally defined for self-employed drivers the way it is for employees — so keep records and receipts. Claim what you actually spend on food and subsistence when away overnight. For sole traders this goes on your self-assessment return as a business expense. For limited company directors, it goes through the company's books as an allowable expense — but given that most single-client HGV setups sit inside IR35 (I covered this in [the IR35 post](/blog/ir35-hgv-driver-psc-off-payroll-working-hmrc-limited-company)), the employee rules likely apply to you anyway. Talk to your accountant.
For transport managers: the paperwork
If you've got tramping drivers and you're not running a formal night-out allowance structure, it's worth reviewing. The upside for the operator is real: paying subsistence tax-free rather than rolling it into gross pay saves employer NI on those payments. The condition is holding the HMRC approval notice and running a basic checking process — which you've effectively already got if you're doing tachograph analysis.
The checking requirement doesn't mean interrogating every driver about every night. It means having a system that would confirm, if HMRC asked, that the driver was genuinely away from home overnight on the night they received the allowance. A route plan, a tacho record, a delivery note. Normal compliance paperwork covers it.
The approval notice from HMRC isn't complicated to obtain — it's an agreement that you'll operate the scale rate rather than require receipts. Most payroll providers can help with this, or your accountant can.
The common mistakes
First: thinking the £34.90 is automatic. It's not. The employer has to have the arrangement in place and actually pay it.
Second: confusing sleeper cab rest with hotel stays. The cab rate (£26.20) applies when the cab is your accommodation. If you've booked a room — at a Premier Inn near a delivery point, say, or at a digs recommended by the operator — the full £34.90 rate applies.
Third: assuming that because you're agency, the rate doesn't apply. It does. The hirer and the umbrella company both have roles in the payment chain, and the benchmark rate is there regardless of employment structure. The question is who's paying it and whether it's being passed to you.
Fourth, and this one catches a few people out on longer tramping runs: the rate is per night away from home, not per day worked. If you leave on a Monday and come home Friday, that's four nights out — not five.
One more thing on the agency side
If you've been tramping through an agency for a year or more and you've never had the night-out allowance discussed properly, pull out your last few payslips and look at how subsistence is itemised. Some agencies do it right. Some don't mention it. Some mention it in the contract and then pay something that doesn't reflect the HMRC rate.
Took me three years to notice the difference. Don't take as long as I did.
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