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HMRC internal manual

Employment Income Manual

HM Revenue & Customs
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The benefits code: expenses payments of directors and employees: scope

Sections 70(1) and 72(1) ITEPA 2003

All sums paid in respect of expenses to a director or employee (for 2015/16 and earlier whose employment is not an excluded employment (EIM20007)), by reason of their employment (Section 70(1) ITEPA 2003) have to be treated as earnings chargeable to tax as employment income (EIM00510) unless:

  • they are otherwise chargeable to income tax (EIM20602) or
  • they are exempt (EIM21240) or
  • they are paid in respect of expenses incurred in connection with a van or car to which a van or car benefit applies (EIM22725 and EIM23100) or
  • an Inspector has issued a dispensation in respect of them (EIM30051 onwards).

A sum paid in respect of expenses includes any sum put at the employee’s disposal and paid away by him (Section 72(1) ITEPA 2003).

Where an employee makes a payment on behalf of his or her employer, see EIM01110.