Introduction

Typically, if an employer reimburses an employee for personal expenditure when they are travelling for business reasons, these amounts would strictly constitute a taxable benefit on the employee. As the expenditure is on personal items, they cannot be wholly, exclusively and necessarily for the purposes of the duties of the employment.

A statutory exemption from tax and NIC is therefore provided for such small incidental overnight expenses (IOEs) incurred by employees and reimbursed by an employer. IOEs were formerly referred to by HMRC as personal incidental expenses (PIEs); however, there was no effective change of interpretation that came with the change of description.

A key feature of the exemption is that it must be reimbursed by the employer; the relief is not afforded to an employee who unilaterally incurs incidental costs without reimbursement. The purpose of the exemption is to remove burdensome administration from the employer over what should be trivial amounts of tax and NIC. The exemption relates to specific amounts incurred in certain circumstances, which are discussed below.

It is important to note