Employment Tax

Round sum allowances

Produced by Tolley
  • 25 Oct 2021 14:15

The following Employment Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Round sum allowances
  • Introduction
  • Round sum allowances
  • Advances of expenses
  • Scale rate payments / incidental overnight expenses
  • Fixed rate deductions

Round sum allowances


Round sum allowances are amounts paid by an employer to an employee to cover future expenditure by the employee. Round sum allowances differ from the reimbursement of actual expenses, scale rate payments and fixed rate deductions.

Round sum allowances

Round sum allowances are normally taxable and subject to NIC as earnings because they are just money available to the employee to be spent. Employers should include the amount in the employee’s payroll and subject the amount to PAYE. The courts have held that round sum allowances, even if they are intended for use on certain business-related expenditure, are taxable as earnings.

The case of Noble held that a round sum expense allowance is taxable as part of the employee’s earnings. In that case, a policeman received a cash allowance for buying civilian clothing. It was held to be a taxable extension of the policeman’s salary. It did not matter that h

Access this article and thousands of others like it
free for 7 days with a trial of TolleyGuidance.

Think Tax.
Think Tolley.

Critical, comprehensive and up-to-date tax information


Popular Articles

Use of capital losses

If an individual sells a chargeable asset and makes an allowable loss, how can this be relieved?First of all, since the simplification of capital gains tax from 6 April 2008, the proforma to calculate a loss is the same as the proforma to calculate a gain. See the Basic calculation principles of

04 Jan 2022 11:11 | Produced by Tolley Read more Read more

Chargeable lifetime transfers

This guidance note explains how to calculate the amount of tax that arises under the lifetime charge. In general terms the lifetime charge will apply to individuals who transfer property into a trust that is subject to the relevant property regime. See the Chargeable transfers and Occasions of

10 Jan 2022 15:01 | Produced by Tolley Read more Read more

Pilot trusts and Will planning

A ‘pilot trust’ is one that holds a nominal amount of property (typically a small sum of cash) and does not become active until further funds are added later. The later addition is sometimes made on the client’s death by a gift in his Will. The use of pilot trusts in conjunction with Wills became a

22 Dec 2021 18:41 | Produced by Tolley Read more Read more