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HMRC internal manual

Tax Credits Technical Manual

Income: Employment income rules - Specific payments and benefits in kind excluded from employment income for tax credit purposes: Expenses

The Tax Credits (Definition and Calculation of Income) Regulations 2002, Reg. 4(5)

Payments in respect of expenses (including the reimbursement of expenses) which are

  • Wholly, exclusively and necessarily incurred in the performance of the duties of the claimant’s employment, or
  • Qualifying travelling expenses


Note: With effect from 6 April 2017 the way in which many salary sacrifice and benefit in kind schemes are taxed will change, which means that some tax credit claimants will see an increase in their taxable income.

For the purposes of tax credits, where one of these schemes is in operation the taxable income figure should be used.