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HMRC internal manual

Compliance Operational Guidance

Supporting Guidance: employer compliance: guidance by subject: working rule agreements (WRA): lodging allowance reimbursement of actual accommodation costs

HM Revenue & Customs accepts that there will be occasions when all the conditions described at COG930660 for the tax and NIC free payment of the lodging allowance are satisfied but the WRA specified rate is inadequate, for example,

  • in high cost areas, such as London, or
  • holiday resorts at peak season

Where this applies employers may reimburse (but not make a general allowance for) actual expenses on production of a receipted bill by the employee.

The employer should

  • retain the bills

    • for six years, or
    • until an intervention is undertaken, whichever is earlier

This procedure does not apply where the employer pays for the accommodation costs direct COG930700