Allowances and Per Diems: What They Cover and How to Budget

A daily allowance is meant to cover ordinary costs away from home. Treating it as a budget, not as extra income, keeps the accounts simple.

What a per diem is

A per diem is a fixed daily amount paid to cover expenses such as meals, local transport and incidentals while working away from home. Some organisations pay a flat rate; others reimburse actual costs against receipts.

Know which system you are on

• Flat rate. You keep what you do not spend, and cover any shortfall yourself.
• Actuals. You are repaid what you spent, up to a limit, with receipts.
• Mixed. Accommodation on actuals, meals at a flat rate, for example.

Budgeting it

• Work out a weekly figure, not a daily one. Costs are uneven.
• Keep a running note of spending in the local currency.
• Set aside a buffer for the one unplanned journey that always happens.

Exchange rates

If your allowance is set in one currency and spent in another, the exchange rate can move against you. Ask whether the rate is fixed for the assignment or adjusted, and how often.

Records

Photograph receipts on the day. Note what each was for. Tax treatment of allowances varies by country and by contract, so ask a tax adviser about your own case.

Entry reviewed 2026-10-13