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HMRC internal manual

National Insurance Manual

Class 1 NICs: Expenses and allowances: Incidental overnight expenses (previously Personal Incidental Expenses or PIEs): Position from 6 April 2004

Regulation 25 and paragraph 1(2) of Part V and paragraph 4 of Part X of Schedule 3 to the Social Security (Contributions) Regulations 2001

Section 240 of the Income Tax (Earnings and Pensions) Act 2003

General

Section 240 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003) excludes incidental overnight expenses from tax where they satisfy certain conditions. See:

  • NIM06015 for guidance on what constitutes an incidental overnight expense (previously known as personal incidental expenses)
  • NIM06020 and NIM06025 for guidance on the NIC treatment of these expenses prior to 6 April 2004
  • EIM02710 for information regarding section 240 ITEPA 2003.

Paragraph 1(2) of Part V and paragraph 4 of Part X of Schedule 3 to the 2001 Contribution Regulations exclude from Class 1 NICs liability incidental overnight expenses which are excluded from tax. This means that NICs are not due in respect of incidental overnight expenses which satisfy the conditions in section 240 ITEPA 2003.

The prescribed maximum

See the guidance at NIM06020 and wherever ‘PIEs’ is used in that guidance substitute incidental overnight expenses’.

Aggregation where the employee is away from home for more than one night

See the guidance at NIM06020 and wherever ‘PIEs’ is used in that guidance substitute incidental overnight expenses’.

Aggregation where incidental overnight expenses are provided in more than one form.

Section 240 ITEPA 2003 requires that where a person receives incidental overnight expenses in more than one form the value of the different elements must be added together to determine whether the prescribed limit has been exceeded. This means that where the cost of incidental overnight expenses is provided in different forms the various elements must be added together to decide whether the prescribed maximum has been exceeded. Only if the total is below the maximum permitted is it exempt from NICs liability. The various elements can include vouchers, credit cards and benefits in kind.

See the guidance at NIM06025 and wherever ‘PIEs’ is used in that guidance substitute incidental overnight expenses’.

See EIM02710 for further guidance on section 240 ITEPA 2004.

See NIM06030 for guidance on the evidence required.