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HMRC internal manual

Employment Income Manual

Tax treatment of teachers, lecturers and tutors: Association of University and College Lecturers notes on expenses deductions expenses payments received from an employer

“10. Expenses payments received from an employer

[Note: see EIM70705 for changes to the law since these notes were published]

In the absence of a “dispensation” given to the employer under Section 166 ICTA 1988, expenses reimbursed to “higher-paid” employees will rank as assessable income upon the employee since the latter’s emoluments are deemed to include not only stipend but also reimbursement of expenses. “Higher-paid” employees are, for 2015/16 and earlier only, employees whose total emoluments for the tax year from a particular employer, including all expenses payments and benefits before the deduction of any allowable expenses, are £8,500 or more (tax year 1979/80 onwards).

Inspectors will usually grant a “dispensation” for routine travelling and subsistence payments for genuine “business” journeys in the UK.

It has now been agreed that, in general, reimbursement of expenses will not be taxed where incurred

  • in attending a conference directly related to university and college etc, work
  • on entertaining directly connected with a teacher’s duties (for example arising from tutorial or supervision duties or on the occasion of official visits)
  • in relation to external examining work (although fees received will be paid under deduction of tax).

Provided that in each case the Inspector is reasonably satisfied that the reimbursement does not exceed the expenditure actually incurred. “Tutorial or supervision duties” include visiting students in “work places” (for example, on “sandwich” degree courses) involving expenditure in entertaining both the student/employee and his employer, but not the holding of tutorials or classes at a teacher’s home for reasons of his own convenience.”