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HMRC internal manual

Employment Income Manual

HM Revenue & Customs
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Employment income: incidental overnight expenses: the permitted amount

Section 241(3) ITEPA 2003

The maximum amounts of incidental overnight expenses that an employer may pay tax free are

  • £5 per night for overnight stays in the UK
  • £10 per night for overnight stays outside the UK.

If a payment is made that exceeds these limits, the whole of the payment becomes taxable and not just the excess, see example EIM02760. The limit is applied to the whole of the period that the employee spends away from home and not to each night separately, see example EIM02770.

Where the employer has a policy that requires the employee to pay back any amount received that exceeds the limit, and repayment is made within a reasonable time, the payment to the employee should be treated as not exceeding the tax free limit.