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HMRC internal manual

Employment Income Manual

Other expenses: cost of living: extra cost of living expenses

It may sometimes be necessary for an employee to live near his or her work or to live in a particular location. As a result the employee may incur extra living expenses over the amount that he or she may have incurred if they were free to live where they want.

If the cost of travel to that workplace is deductible under Section 337 to 340 ITEPA 2003 then the deductible expenses will include subsistence and accommodation costs that are attributable to that travel, see EIM31815. The circumstances in which travelling expenses may be deducted are explained in the instructions beginning at EIM31805.

Otherwise the extra living expense incurred is not deductible under Section 336 ITEPA 2003. The expense is not incurred in the performance of the duties of the employment.

There are several decided cases in which a deduction was refused for extra expenses of this kind.

Bolam v Barlow 31TC136 Water board employee
Collis v Hoare 31TC173 Admiralty employee
McKie v Warner 40TC65 Company director
Elderkin v Hindmarsh 60TC651 Pipe inspector