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E4.602 Expenses payments

Where, by reason of the employment, anyone pays an employee sums for expenses which apart from these provisions do not constitute earnings¹ (see E4.421, E4.423), those sums are to be treated as earnings². In other words, the director or employee is placed in the same position as if the expenses allowance or refund had been paid to them simply as remuneration. Hence, form P11D is a return of expenses as well as benefits.

For 2015/16 and earlier years, this did not apply to those in excluded employment (see E4.601C). For 2016/17 onwards, it continues not to apply to anyone in lower-paid employment as a minister of religion (see E4.743A).

References to expenses paid to an employee include sums put at the employee's disposal and paid away by them, for example a petty cash float³. Expenses met by an employer are deemed to be by reason of employment unless the employer is an individual and the expenses are part of the normal course of domestic, family or personal relationships⁴.

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