When an employee stays away from home for work purposes, employers can meet small personal expenses and avoid a tax charge with no need to report expenses to HMRC.

What are incidental overnight expenses?

Incidental overnight expenses are non-business expenses which often occur when an employee must travel for business purposes. For example, personal expenses such as:

  • A newspaper
  • Laundry
  • Telephone calls to home

How much is the exempt amount?

The exempt amount is calculated per night and currently sits at £5 per night for UK trips and £10 per night for overseas trips.

The exemption is only available if the expenses are within these limits. If employers decide to reimburse employees for more than these amounts, then the full amount if taxable, not just the excess over the exempt amount.

What about longer travel?

The exemption amount can be applied to travel per trip, rather than day-to-day.

So, even if the employee exceeds the spending allowance on one day, if the overall average is under the exempt amount, everything is fine.

For example, if David is sent on a 5-day trip to Germany, his overall allowance for the trip is £50. This would give him an average allowance of £10 per day.

However, he spends £12 on the first day, meaning that he would technically be over this daily limit. To avoid his employer paying full tax on his personal expenses, he simply spends just £8 the next day. This balances the average, meaning that David just spends £10 per day for the remainder of his trip.

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Any questions?

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