EIM35130 - Travelling expenses: Non-resident and qualifying new resident employees working in the United Kingdom: forms P11D and exemptions
Sections 373 to 375 ITEPA 2003
The expenses incurred by the employer should be shown on forms P11D unless covered by an exemption. An employer can apply for an exemption if they want to apply for a bespoke or industry scale rate for reporting non-taxable expenses and benefits. You do not need to apply for an exemption if you're paying HMRC's benchmark rates for allowable expenses.
Where the exemption applies, PAYE does not apply to the payments or benefits concerned. The employer does not need to show the particular payments or benefits on the annual returns (forms P11D) they submit to HMRC and the employee does not need to show them on their tax return.
Exemptions
Exemptions for such expenses (unless covered by Sections 338 to 340 ITEPA 2003) can only be given in respect of named individuals and the employer's attention should be drawn to Chapter 7 of Booklet 490 when dealing with these requests.
Only consider a request for an exemption when the employee has established that he or she is non-resident or a qualifying new resident in the United Kingdom.
In no case should an exemption be given for the travelling expenses of the employee's family.
An exemption to cover an employee's travelling expenses within EIM35030 must specify the date after which it ceases to apply. This will be the date determined under EIM35060. Such an exemption must also exclude any private expenditure.
The legislation covering exemptions can be found at s.289A to 289C ITEPA 2003. For more information about exemptions, see EIM30200.