Incidental overnight expenses

By Tolley in association with Philip Rutherford

The following Employment Tax guidance note by Tolley in association with Philip Rutherford provides comprehensive and up to date tax information covering:

  • Incidental overnight expenses
  • Introduction
  • Incidental overnight expenses
  • Working rule agreement
  • Reporting requirements


Typically, if an employer reimburses an employee for personal expenditure when he is travelling for business reasons, these amounts would 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.

There is a statutory exemption from tax and NIC for small amounts incurred by employees and reimbursed by an employer. The 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.

Scale rate payments to an employee are exempt if these are either within amounts set out in regulations made by the Commissioners for HMRC or at a level approved by HMRC under ITEPA 2003 s 289B (HMRC’s power to agree flat rate expenses).

ITEPA 2003, s 289A(2), (6)
Incidental overnight expenses

There are limits on the tax-free amounts that can be paid under the incidental overnight expenditure rules. The payment of excess amounts or the payment of amounts which do not fit t

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