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HMRC internal manual

Employment Income Manual

HM Revenue & Customs
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The benefits code: beneficial loans: advances of expenses

Section 179 ITEPA 2003

Advance payments made to an employee by an employer to cover any necessary expenses or incidental overnight expenses the employee will incur in performing his or her duties are strictly loans.

In practice they are not treated as beneficial loans giving rise to tax charges where the following conditions are met:

  • the maximum amount advanced at any one time does not exceed £1,000
  • the advances are spent within six months and
  • the employee accounts to his or her employer at regular intervals for the expenditure of the sum advanced.

Advances that meet these conditions need not be included as beneficial loans on forms P11D. Other such advances should be so included, but where there is good reason for exceeding the limits, for example, on account of a lengthy overseas trip, they will not in practice be brought into charge as loans. This in no way affects an employer’s statutory obligation to provide, on forms P11D, details of expenses payments made to employees except for 2015/16 and earlier those in an excluded employment.

See EIM26156 for other tax consequences of advances of expenses.