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Incidental overnight expenses

Produced by Tolley in association with
Employment Tax
Guidance

Incidental overnight expenses

Produced by Tolley in association with
Employment Tax
Guidance
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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

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Philip Rutherford
Philip Rutherford

Senior Tax Director at Molson Coors Brewing Company


Phil is the Senior Tax Director for Molson Coors' European operations. He has responsibility for both direct and indirect taxes across both EU and non-EU states. Prior to this, Phil was responsible for Molson Coors UK tax affairs covering all major taxes and duties.   Phil trained at KPMG LLP, where he worked for 8 years, specialising in tax investigations across both direct and indirect tax.

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  • 15 Nov 2022 16:15

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