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HMRC internal manual

Employment Income Manual

Deductions from general earnings: the benefits code: example of deduction from expenses payments

Section 72(2) ITEPA 2003

An employee has to travel on business from Birmingham to London. Her employer estimates that this will cost £120 and pays her that amount on a no-return basis. She is able to buy a return rail ticket costing £70.

The expense payment by her employer is treated as earnings and charged on her by the operation of section 70 ITEPA 2003. From that amount, she can deduct the same amount that she could have deducted if she had met the travel expense herself. She can deduct £70 and so is charged on a net amount of £50.