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HMRC internal manual

Employment Income Manual

Employment income: incidental overnight expenses: exemption from charge

Sections 240 and 241 ITEPA 2003

Employees who stay away from home overnight may incur incidental expenses for which no relief is permitted under the deduction rules in Part 5 ITEPA 2003. For example, they may buy newspapers, pay for laundry or phone home. These expenses are not incurred necessarily in performing the duties of the employment, see EIM31810.

Section 240 ITEPA 2003 exempts from charge certain payments made to employees to cover incidental expenses that cannot be relieved under any of the rules in Part 5 ITEPA 2003 and that they may incur while staying away from home overnight during a business trip.

Section 240 only exempts employer payments and does not permit a deduction for incidental expenses incurred by the employee that are not reimbursed by the employer.

The exemption covers all possible ways in which the payment could be made. For example it covers

  • payment by non-cash voucher
  • the use of a credit card in the employer’s name
  • benefits in kind, for example where the employer pays the bill directly
  • cash payments.

The payments are only exempt if the whole period away from home is a qualifying period,see EIM02720.

The permitted amounts that may be paid free of tax are set out in EIM02730.

Tactical advice on examining payments by employers to ensure compliance with the legislation is at EIM02740.

The effect of the legislation is illustrated by examples beginning at EIM02750.