Are my expenses likely to be taxable?

Under general taxation law, some but not all expenses paid by an employer are taxable. It is often difficult to know which expenses are taxable so we provide only a broad outline here. Most expenses paid for costs necessarily incurred during the course of employment will not be taxable, although if your employer reimburses more than the actual cost you will be liable for tax on the extra money paid.

The types of expense payments made to employees which are taxable include those in connection with:

  • travelling;
  • mileage allowances;
  • entertainment;
  • company credit cards; and
  • home relocation (at the request of the employer or on starting a new job).

Expense deductions are allowed for each of these items in accordance with HM Revenue and Customs rules. For instance, if you have to move to take up a new job or are transferred by your employer, the first £8,000 of relocation expenses paid for reasonable removal costs will be exempt from tax.

Mileage allowances, paid in return for the use of your own car during the course of your employment, may only be taxable if paid above a specified mileage or rate for each mile. The Low Incomes Tax Reform Group has more information on taxable expenses. So does tax charity TaxAid. The GOV.UK website also has a comprehensive A-Z of employment expenses and benefits.

Note: This content is provided as general background information and should not be taken as legal advice or financial advice for your particular situation. Make sure to get individual advice on your case from your union, a source on our free help page or an independent financial advisor before taking any action.