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HMRC internal manual

Employment Income Manual

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HM Revenue & Customs
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Tax treatment of building and civil engineering employees: travel and lodging allowances

The guidance at EIM50610 to EIM50630 explains when employees in the building and civil engineering industries can receive travel and lodging allowances under the terms of working rule agreements without tax being deducted under PAYE.

Employees are entitled to tax relief under Section 338 ITEPA 2003 for travel for necessary attendance at certain workplaces (see EIM32000 onwards) andunder Section 337 ITEPA 2003 for travel in the performance of the duties of the employment(see EIM32350 onwards). So:

  • an employee who receives tax free allowances under the terms of a working rule agreement may be entitled to a deduction under Sections 337 or 338 ITEPA 2002 for further expenses he or she incurs out of their own pocket and
  • an employee who does not receive tax free allowances under a working rule agreement may be entitled to a deduction under Sections 337 or 338 ITEPA 2002. .

For details of the rules on employee travel and subsistence see EIM31800. For an example showing how the new rules apply in cases involving working rule agreements see Booklet 490 paragraph 8.25.