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HMRC internal manual

Employment Income Manual

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HM Revenue & Customs
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Other expenses: flat rate expenses: locally agreed flat rate deductions: amounts for 2008/09 onwards

Section 336 ITEPA 2003

For 2008/09 onwards, HMRC officers may still agree “locally agreed” flat rate expenses allowances in appropriate cases (see EIM32725). However, if the amount you intend to agree is £165 or less you must only use one of the following six amounts. This is so that the allowances can later be uprated automatically as part of the annual coding initial review:

£60

£80

£100

£120

£140

£165

So for example, if you are given evidence that the group of employees you are dealing with all regularly spend £115 a year on allowable expenses, the FRE allowance to be given is £120.

If the evidence shows that the employees are regularly spending more than £165 a year on allowable expenses, allow whatever amount is supported by the evidence. In that case, the allowance will not be uprated automatically and
 

  • you should agree to look at the allowance again after a suitable period (usually, five years) and
  • if you then increase the allowance, the employees will have to make individual claims for the increased amount.