Employers can pay tax free amounts of up to £5 per night for overnight stays away from home in the UK and up to £10 per night for overseas overnight stays. This tax free amount is to cover the cost of laundry, telephone calls home, buying a newspaper, etc.
If the employer pays more than this limit then the whole amount becomes taxable on the employee. It is important to ensure that the payments are for genuine trips in connection with employment and if the payment is made not for the purposes of covering incidental costs then the payment will not be exempt.
The employer can deduct the reimbursement as an expense thus saving tax on the costs.
We can help
At Rouse Chartered Accountants our west of London based team of tax advisors can review your tax position to ensure that you are not paying a single penny more tax than you absolutely have to.
Contact us to discuss your circumstances so that we can correctly advise you.
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