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As outlined in E4.707B employee expenses payments or reimbursements and benefits are not treated as earnings provided they are covered by a matching deduction and are not part of salary sacrifice arrangements. This exemption presumes that satisfactory records are kept to justify the expenses claims are allowable for tax and NIC purposes, and that appropriate employer checking processes are in place.

Over recent years, HMRC has relaxed its view of what constitutes adequate evidence of employee expenditure. For example, the previous requirement for a 'proper record' of expenditure, accompanied by a declaration signed by the employee is no longer formally required across the board. Leaflet CWG2¹ acknowledges that maintenance of a log is not the only acceptable way in which business use, of a telephone, for example, can be identified.

Records may also be kept by the employer, the employee, or a combination of both. For example in the case of a long-distance lorry driver claiming scale rate subsistence, the individual may possess personal records (eg tachographs), or the employer may hold electronic