General principles

An employee may receive a payment from his employer as reimbursement of an expense incurred as part of his employment duties. These payments are not earnings within ITEPA 2003, s 62 and are therefore not taxable under that provision. Many reimbursed payments are considered as earnings under ITEPA 2003, s 72 but if a deduction would be available for the same amount under the expenses rules, the reimbursement is exempt under ITEPA 2003, s 289A (see the Expenses ― general rule and Expenses and benefits matched by allowable deductions guidance notes).

In some circumstances (eg a payment of a home to work mileage allowance, classed as private commuting and not a business cost), a payment of expenses does not qualify for a corresponding deduction. Such a payment is treated as earnings for UK tax and NIC purposes.

Employees can be required to make payments on their employer’s behalf in many different situations. For example, an employee may buy stamps for the employer and be paid from