Guidance

Tax treatment of expenses payments (480: Chapter 3)

Find out about the tax treatment of expenses payments.

• From: HM Revenue & Customs
• Published: 30 December 2019

3.1

Section 70(1)

The provisions of the benefits code make sure that expenses payments made to an employee by reason of their employment will normally rank as remuneration of the employee to whom they’re paid unless they’re already taxable or are covered by an exemption. For exceptions to this see chapter 5.

3.2

Expenses payments include:

• advance payments on account of expenses and reimbursements of expenses incurred, including all kinds of travelling and entertaining expenses – for reimbursed motoring expenses see paragraph 11.13 and paragraph 11.14
• allowances related to specific expenses, for example, based on mileage or to meet subsistence whether calculated by reference to a fixed scale or otherwise
• round sum allowances for entertaining and other expenses

Section 70(2)

• amounts put at the disposal of the employee for expenses and paid away by the employee

Section 90(1)

• expenses paid by the employee by means of a credit card in the employer’s name – unless the card you’ve given was used to make a business purchase, an employee has your prior authority for the purchase and when making the purchase an employee makes it clear that they’re acting on behalf of your business

For a purchase to be clearly on your business’s behalf the following must apply:

• your employee must explain in advance that the purchase is on your behalf
• the supplier must accept that the purchase is on your behalf

3.3

More information about travelling and subsistence, cars and entertainment, is given in chapters 8 to 16 and chapter 20.

Published 30 December 2019