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HMRC internal manual

Employment Income Manual

Tax treatment of lorry drivers: subsistence allowances paid to lorry drivers: payments in excess of the approved amount

Sections 337 and 338 ITEPA 2003

An employer wishing to make subsistence payments in excess of the approved amount without deducting tax may do so, provided that:

  • the payments are intended merely to reimburse the actual expenditure incurred and are made against formal claims from the employee concerned, or supported by suitable evidence, see EIM66120 or
  • the detailed arrangements under which such payments are made have received the formal approval in writing of the appropriate Inspector.

Where a request for approval is received the Inspector should carefully examine the proposed arrangements to ensure:

  • that the conditions of EIM66105 are met and
  • that the employees concerned genuinely incur, on a day-to-day basis, the expenses that the allowance is intended to cover.

Subsistence payments not covered by these instructions should be subjected to tax.