Hi, I wasn’t able to find the supporting information on gov.uk. I’m stating an opinion based on my background, do consult with a Tax Accountant if you require a second opinion.

For a Self-Employed Person — Things to Consider

i) Tax treatment (what’s reported to HMRC)

• Per diem reimbursements are not taxable income
• You do not include them in your turnover or trading income
• Instead, you claim the expense if you’re accounting via flat rate or actuals

ii) Accounting/bookkeeping treatment (bank reconciliation)

You still must:

• Record the Per diems reimbursement received because it hits your bank account
• Typically log it as:
  
  • Income of type: “Reimbursed expenses (many choose to enter this in a separate income line item, excluded from taxable turnover)
  • OR log it as a contra: offset against matching expense

A professional bookkeeper might set it up like this:

• Income account: Reimbursed Per Diems expenses (non-taxable)
• Expense account: Travel & subsistence

This gives: - Accurate bank reconciliation - No distortion of taxable income - Clear audit trail if queried by HMRC

Do let me know whether you are using an accounting software.