Figures relate to tax year 2026 (US) · 2026-27 (UK)
You sleep in the cab three nights a week and the firm pays you for it. On the British side that money is usually tax free.
HGV drivers with an American passport then find the same allowance sitting in income on the other return.
Nothing in the American code matches the British concession.
Key takeaways
- Night out allowances are usually tax free in Britain.
- America has no equivalent concession for them.
- An allowance paid under an accountable plan can still escape.
- Nights abroad do not make the pay foreign income.
- The route decides nothing, the base decides a lot.
- Owner-drivers face a self-employment charge as well.
- The exclusion usually covers a UK-based salary.
- Your tachograph is already the record you need.
What is the night out allowance?
A payment for sleeping away from home in the vehicle, paid at agreed rates. According to GOV.UK guidance on travel expenses, an allowance meeting the conditions is not taxed. Most firms pay it under an approved scheme.
Our guide to benefits in kind covers allowances.
Britain is genuinely generous to HGV drivers here.
How does America treat it?
It depends entirely on how the payment is structured rather than what it is called. A a repayment under an accountable plan can escape income. A flat allowance with no accounting usually lands in your pay.
Our guide to [splitting employment income](/blog/uk-employment-income-day split) covers allocation.
For HGV drivers the structure beats the label.
What is an accountable plan?
An scheme where the payment covers real business costs, you prove them, and you return anything unspent. Meet those three and the money stays outside income. Fail any of them and the whole allowance becomes pay.
Our guide to employment expenses on a US return covers proof.
Three conditions, and all three must hold.
British and American treatment compared
| Payment | UK | US |
|---|---|---|
| Approved night out rate | Tax free | Depends on the plan |
| Flat untracked allowance | Often tax free | Taxable pay |
| Reimbursed receipts | Tax free | Usually outside income |
| Meal money with no receipts | Often tax free | Taxable pay |
| Basic salary | Taxed | Taxed |
| Overtime and bonuses | Taxed | Taxed |
Do nights abroad make the pay foreign?
Not in the way drivers hope. Sourcing follows where you perform the duties, so a week in France does produce some foreign workdays. However the day split is usually small and the record keeping heavy.
Our guide to the foreign tax credit covers relief.
A few continental days rarely change much for HGV drivers.
Does that mean a foreign tax bill?
Rarely, because most European countries leave short visiting drivers alone under the treaty. Your employer and your base stay in Britain. So the continental days raise sourcing questions without producing foreign tax.
Our guide to the US-UK tax treaty covers the articles.
Short trips rarely create a foreign filing.
A worked example
Take an illustrative case. An American driver based in Kent on UK and northern European routes.
The salary is around £38,000 with roughly £5,000 of night out allowances on top of it.
Britain taxes the salary through payroll and leaves the allowances alone entirely.
America taxes the salary too, and whether it reaches the allowances depends on how the firm documents them.
Can HGV drivers use the exclusion?
Usually yes, because a British base produces foreign earned income for American purposes. The exclusion then covers a salary at this level comfortably. So the income tax question often disappears entirely.
Our guide to Form 2555 and the exclusion covers the claim.
A driver's salary sits well inside the limit.
Does the exclusion cover the allowances?
If they count as pay at all, then yes, because they are part of the same foreign earnings. So the accountable plan question matters less for an employed driver than it first appears. It matters a great deal for an owner-driver.
Our guide to income baskets on Form 1116 covers the alternative.
The exclusion sweeps up most of it anyway.
Why is it different for an owner-driver?
Because the exclusion never touches the self-employment charge, which runs at roughly 15%. Every pound that counts as profit feeds that charge. So the expense question becomes the whole argument.
Our guide to self-employment here covers the charge.
Profit drives the charge, so HGV drivers watch expenses.
Can an owner-driver avoid that charge?
Usually yes, through the agreement between the two countries. A certificate of coverage places you in the British system alone. That document is worth more than any deduction you could find.
Our guide to certificates of coverage covers the application.
Get the certificate before anything else.
What expenses can an owner-driver claim?
Fuel, maintenance, insurance, licence costs, overnight costs and the running cost of the vehicle. Britain and America both allow them, though the write-down rules differ. So the profit figure rarely matches between the two returns.
Our guide to capital allowances covers the vehicle.
Expect two different profit figures.
How is the lorry itself treated?
Britain gives capital allowances and America gives write-down, and the two run on different timetables. A big write-off in one year here may spread over years there. So the mismatch is built in rather than an error.
Our guide to incorporation relief covers restructuring.
Two systems, two write-down schedules.
What if you drive through a limited company?
Then a British company with an American owner raises reporting that dwarfs the tax. The forms are long and the penalties for missing them are severe. So setting up a company needs American advice before the British one.
Our guide to a UK company with an American owner covers the forms.
Never incorporate without checking this.
Do agency drivers differ?
The status question is sharper, because agency and umbrella schemes vary widely. Some put you on a payroll and some do not. So read the contract rather than assuming the usual answer.
Our guide to the IR35 rules covers status.
Agency contracts vary more than most.
What about the driver CPC and licences?
Periodic training and medicals required for the job can qualify for relief here. America gives employees nothing for unpaid back costs. So an employed driver claims here and an owner-driver claims on both.
Our guide to registering for self assessment covers filing.
Employed HGV drivers claim here and nothing there.
Does the tachograph help?
Enormously, because it already records where you were and when. That is exactly the evidence any day split or allowance claim needs. So download and keep the data rather than letting it roll off.
Our guide to exchange rates on a US return covers conversion.
HGV drivers already carry the record they need.
Do HGV drivers report their accounts?
Yes, on the usual terms, and drivers often hold a euro account for fuel and tolls. Each account counts on its highest balance during the year. So a working float can still bring you into scope.
Our guide to FBAR signature authority covers the accounts.
A fuel card account may count too.
What about a workplace pension?
Stay in it, because the treaty protects a British workplace scheme reasonably well. Opting out to simplify American paperwork costs far more than it saves. So being enrolled is good news rather than a problem.
Our guide to employer pension contributions covers enrolment.
Never opt out over American paperwork.
What if you move base abroad?
A base in Ireland or the Netherlands changes where the employment sits and often where social security sits. Your residence may not move with it. So the base and the home can end up in different countries.
Our guide to the treaty tie-breaker covers dual residence.
A new base is a bigger change than a new route.
Does a tramping pattern affect residence?
Less than drivers expect, because nights in the cab in Britain are still nights here. Continental trips are short and you return. So most tramping drivers stay comfortably UK resident.
Our guide to the UK statutory residence test covers residence.
Tramping rarely moves an HGV driver's residence.
What records should HGV drivers keep?
Payslips showing allowances separately, the firm's written policy on night out pay, tachograph downloads, and expense receipts for an owner-driver. Those four answer almost everything that comes up later, and three of them already exist somewhere.
Our guide to US tax deadlines for expats covers the dates.
Ask the firm for its written policy.
Why does the policy matter?
Because it is the evidence that decides the American treatment of the allowance. A firm operating a proper scheme hands you the answer. In our practice the drivers who struggle are the ones paid round sums with nothing in writing.
Our guide to a second opinion on your return covers reviews.
Round sums with no paperwork cause the trouble.
When should you get advice?
Before going owner-driver, because that is where the real money sits. An employed driver on a British payroll is usually straightforward from end to end. The self-employment charge is the part that catches people out, and it arrives with the first invoice.
Our guide to choosing a US-UK tax accountant covers getting help.
Ask before you buy your own unit.
Why do HGV drivers meet this at all?
Because the job pays part of the wage as an allowance rather than salary. Most employees never see a payment structured that way. So drivers meet a question almost nobody else has to answer.
Our guide to UK state benefits covers other payments.
The pay structure creates the problem.
How much money is at stake?
On a busy tramping year the allowances can reach £5,000 or more. That is a real sum if it turns out to be taxable somewhere. So it is worth ten minutes with the payroll office.
Our guide to US filing thresholds covers the limits.
Five thousand pounds deserves a question.
What about meal allowances?
Britain has set rates for meals taken while working away, paid without receipts. America wants the business purpose evidenced before it leaves income. So the same meal money can be clean here and taxable there.
Our guide to UK bonus payments covers extra pay.
Meal money follows the same logic.
What about a parking or ferry card?
Costs the firm pays directly are the firm's costs, not yours. Neither country treats them as your income. So a company fuel or toll card is the simplest arrangement of all.
Our guide to shadow payroll covers employer costs.
Company cards keep the whole question simple, so ask for one.
Does night heater or fridge running count?
Running costs of the vehicle belong to whoever owns it. An employed driver bears none of them. An owner-driver claims them as ordinary business costs on both returns. Most HGV drivers find this simpler than they expect.
Our guide to directors loan accounts covers the vehicle.
Ownership of the unit decides who claims the running costs.
What if you drive for a US haulier?
If the work happens in Britain, Britain taxes it whoever signs the cheque. An American payroll may withhold as well, which creates a reclaim. So tell payroll where you actually drive.
Our guide to working remotely for a US employer covers payroll.
Where you drive beats who pays you.
Does a tanker or ADR ticket change anything?
Only the pay, not the tax rules. Specialist tickets usually bring a higher rate and sometimes extra allowances. So the analysis is the same with bigger numbers in it. The firm's payroll office can usually confirm it in a minute.
Our guide to UK employment expenses covers claims.
Higher pay, and exactly the same rules underneath it.
What if you take a UK break in work?
A gap between jobs does not change your residence here. The exclusion needs a qualifying period rather than continuous work. So a few weeks off rarely costs you the relief.
Our guide to split year treatment covers mid-year changes.
A gap between jobs is not a move.
Who should ask about this first?
Any driver paid round sum allowances with nothing in writing, and anybody about to buy their own unit. An employed driver on a documented scheme can relax. The gaps are where the cost sits.
Our guide to an enrolled agent or a CPA covers advisers.
Round sums and new units need a check.
How long does the first return take?
An hour or two for an employed driver with payslips to hand. An owner-driver takes longer, because the accounts have to be rebuilt in two shapes. So keep the bookkeeping current through the year.
Our guide to payments on account covers the British bill.
Employed is quick, owner-driver is not.
How HGV drivers should handle both returns
- Ask the firm for its written night out policy.
- Check whether allowances are paid back or paid as round sums.
- Claim the exclusion against a British salary.
- Expect the exclusion to cover allowances treated as pay.
- Get a certificate of coverage before going owner-driver.
- Keep tachograph downloads as your location record.
- Expect different profit figures on the two returns.
- Report every account, including euro working floats.
Mistakes and penalties we see with HGV drivers
The first is assuming a British tax free allowance is automatically invisible to America, which it is not.
The second is going owner-driver without a certificate of coverage and paying social security twice.
The third is setting up a company a haulage business without checking the American reporting that follows.
The fourth is letting tachograph data roll off, which makes any later day split impossible to evidence.
How US UK Tax Accountants helps
We look at how the allowances are paid first, because that decides whether America can reach them.
Then we deal with the self-employment charge for owner-drivers. Our US federal returns service covers the American filing.
If you drive for a living on an American passport, get in touch before the next filing season.
Last reviewed 6 November 2026. This article is general information and not personal tax advice.
For the neighbouring question, The tronc saves national insurance and nothing else walks through it in detail.
Not sure where you stand?
Tell us what you hold across the US and UK. We come back with the scope and a fixed fee in writing, at no cost.
Get in TouchPrimary sources
Official guidance from the IRS, FinCEN and GOV.UK. Thresholds and rates on those pages are updated annually — check the current tax year before relying on a figure.
- GOV.UK — Expenses and benefits: travel and subsistence (opens in a new tab)
- GOV.UK — Self Assessment tax returns (opens in a new tab)
- IRS — About Publication 463, Travel, Gift, and Car Expenses (opens in a new tab)
- IRS — Foreign earned income exclusion (opens in a new tab)
- IRS — Independent contractor, self-employed or employee (opens in a new tab)
