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HMRC internal manual

Employment Income Manual

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HM Revenue & Customs
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Travelling expenses: employees working but not domiciled in the United Kingdom: deductions limited to amount included in earnings

Sections 373 to 375 ITEPA 2003

The deductions for non domiciled employees travelling to work in the United Kingdom provided by Sections 373 to 375 only apply where the employee’s taxable earnings include an amount in respect of:

  • the provision of travel facilities for a journey made by the employee or the employee’s spouse, civil partner or child, or
  • the reimbursement of expenses incurred by the employee on such a journey.

This approach provides a built-in test. In the usual case, it will limit the deductions to the amounts that an employer is prepared to pay.

The deductions are available against earnings charged on receipt. This means that the deductions cannot be given against earnings charged on remittance under either Section 22 ITEPA 2003 (see EIM40102) or Section 26 ITEPA 2003 (see EIM40304).

Round sum allowances

A general increase in pay or a round sum allowance does not represent “an amount in respect of the provision of travel facilities for a journey … or the reimbursement of expenses incurred … on such a journey”. However, a common sense approach should be taken. Do not refuse to accept a deduction simply because the employer meets expenditure by reasonable and properly controlled scale payments.

Double taxation treaty exemption

Employees who work in the United Kingdom for a very short time may be exempt from the charge to United Kingdom income tax under the provisions of a double taxation agreement (see DT220 and DT1920).