7.1ÌýÌýÌýÌý Expenses and temporary workplace
As noted in 3.1, if a payment is made to an employee that is simply a reimbursement of an expense for which the employee is entitled to a deduction, then there is no requirement to run PAYE on such a payment (ITEPA 2003, s 289A).
The same applies for a payment that is based on a flat or scale rate that has been agreed with HMRC to represent no more than the expenses incurred. The scale rate must be agreed with HMRC in advance of the payment being made and any agreement cannot be for more than five years (ITEPA 2003, s 289B(4)(c)).
As a result of the exemption for expenses that are either business expenses or
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