E4.707B Exemption For Amounts Which Would Otherwise Be Deductible

Home / Simons-Taxes /Personal and employment tax /Part E4 Employment income /Division E4.7 Allowable employee deductions and exempt employer payments /Employee expenses—general rule and employer reimbursements / E4.707B Exemption for amounts which would otherwise be deductible

Commentary

Personal and employment tax

From 2016/17 onwards an exemption applies to expenses payments or reimbursements and benefits treated as earnings provided they are covered by a matching deduction and are not part of salary sacrifice arrangements. This exemption replaces the system of employers applying for a dispensation in similar circumstances (see E4.672).

Expenses payments

No liability to tax arises under ITEPA 2003, ss 70–72 (Pt 3, Ch 3), see E4.602 on the payment or reimbursement of an employee's expenses provided¹:

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•�� an amount at least equal to the payment/reimbursement would be an allowable deduction under ITEPA 2003, ss 333–360A (Pt 5, Ch 2 – deductions for employees' expenses) or ITEPA 2003, ss 369–377 (Pt 5, Ch 5 – deductions for earnings representing benefits or reimbursed expenses: mainly foreign travel costs and accommodation and personal security expenses), and
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•�� the payment/reimbursement is not part of salary sacrifice arrangements²

Whilst this exemption removes much of the administrative burden of applying for a dispensation, employers would be wise to collect and maintain

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