Non-business expenses

Copyright © 2026 LexisNexis
Produced by a Tolley Employment Tax expert
Employment Tax
Guidance

Non-business expenses

Copyright © 2026 LexisNexis
Produced by a Tolley Employment Tax expert
Employment Tax
Guidance
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Introduction

In order for an expense to be tax deductible, it must be incurred because of an employee’s employment. Any non-business related expense is, therefore, not relievable except in some very particular circumstances.

This guidance note deals with three separate issues. The first is where an expense has both a business and private element. In this case some, or indeed all, of the expense may be allowable. The second case is where an expense must be treated as a non-business expense and is not deductible for tax purposes. The third is expenditure which appears on principles to be non-business yet qualifies as non-taxable, usually due to statutory provision or HMRC concession.

Dual purposes

In order to claim a deduction for tax purposes, the expenditure must be incurred ‘wholly, exclusively and necessarily in the performance of the duties of the employment’. This is discussed in the Expenses ― general rule guidance note. If an expense is not incurred for these reasons then it is disallowed.

However, despite the strictness of this test, it is understood that there are

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  • 10 Nov 2025 10:50

Home/ Tolley Tax Guidance/ Employment Tax / Paying expenses to employees

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