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HMRC internal manual

Employment Income Manual

From
HM Revenue & Customs
Updated
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Tax treatment of building and civil engineering employees: tax-free payments

Lodging allowances under the CIJC agreement may be paid without deduction of tax if the employee was recruited by one of the following methods.

a. Personal application other than that at the site. The worker applies for work in person at the employer’s central or regional recruiting office and is instructed to present himself or herself for employment at a site.

b. Written application to recruiting office. The worker writes to the employer’s central or regional recruiting office, either in response to an advertisement or speculatively, and is instructed by that office to present himself or herself for employment at a site.

c. Written application to site. The worker writes to the site office, either in response to an advertisement or speculatively and is instructed by that office to present himself or herself for employment at the site.

d. Recruitment through job centre or trade union. The worker is sent to the site by a job centre or trade union office in response to the employer’s indent for labour placed on the basis that the office will be regarded as the place of recruitment.

e. Transfer by same employer. The worker is transferred by his or her employer from one site to another without any break in his or her employment. For this purpose, associated companies may be regarded as a single employer.

f. Further employment in the same locality. The worker, having been employed on a site where he or she received subsistence allowance, seeks employment with another contractor on the same site, or on another contract within 15 miles of his or her previous employment, provided that he or she waives his or her entitlement under the working rules to a periodic travel payment for the initial journey from his or her normal place of residence or engagement.

Under methods a to e above, the essential criterion in determining that subsistence allowance should not be treated as pay for tax deduction purposes is evidence that a contract of employment existed before the worker was sent to the site. He or she should not have been subjected to any process of selection by interview at the site.

Payments of lodging allowances may also be made free of tax under the rules outlined at EIM10060 if an employee based at a shop or depot is sent out from that base for temporary employment on a site, which entails his or her living away from his or her normal place of residence. This situation will rarely arise because employees in the building and civil engineering industries do not normally have a single continuing place of work such as the employer’s base. Instead they work on a succession of different sites. Where that is the case, tax-free payment of lodging allowances is not subject to the 24 months limit (see EIM10060).