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HMRC internal manual

Employment Income Manual

Tax treatment of local authority officials and employees: other benefits and allowances


Other benefits and allowances may be provided but, as they may vary in scope and amount from authority to authority, it is hard to generalise about them. Tax offices should obtain, from local authorities for which they are responsible, details of the nature, scope and amount of other benefits and payments, and of any changes to them.

The most common payments are probably meal allowances (see EIM01530) and allowances to meet all or part of telephone expenses (see EIM07800). Meal allowances count as earnings within Section 62 ITEPA 2003 for all employees irrespective of their rate of pay. Allowances in respect of telephone expenses can give rise to liability on all employees or only on employees who for 2015/16 and earlier are not in excluded employments (see EIM20007) depending on the circumstances of payment.

The local authority should be:

  • advised to operate PAYE, or
  • advised to record the expenses and benefits but not to operate PAYE (see EIM30051 and pages 75 to 81 of the Employer’s Further Guide to PAYE and NICs ), or
  • issued with a dispensation (see EIM30051 onwards) as appropriate.