Overnight substance/lodge allowance

Minilaura_2

Hi this is my first time posting, I am after some help with regards my partners P60. So he works all over the country and his employer pays him a lodge allowance. We have noticed on his P60 this lodge allowance is classed as earnings and totalled up for the whole year with his hourly rate. But should this be the case, this is a lodge allowance he is using this to put a roof over his head while he is away. Many thanks everyone sorry if I haven’t explained this very well.

comeandgo

Subsistence is taxable unless your employer has got a dispensation from HMRC.

00ec25

if you are certain that your use of the word "lodging" is correct for his circumstances, then please read this, noting that, as above, the default position is it is taxable

https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim71307

the reason being an allowance is money received where there is no evidence of what it was spent on. You may spend less than the allowance on your actual subsistence and hotel costs and so end up in profit, aka have income you have got tax free. That is why the default is to tax all of it.

You are then of course perfectly entitled to claim tax relief on any valid business expenses you have actually paid.

The advantage of a lodging allowance to an employer is they do not have to spend time and money on policing an expenses checking system. For them it may be cheaper to simply pay through payroll and take a gamble that they could have spend a few pennies less if they operated an expenses system instead.

TheCyclingProgrammer

comeandgo wrote: »

Subsistence is taxable unless your employer has got a dispensation from HMRC.

Dispensations do not exist any more.

Genuine travel and subsistence expenses for business travel or travel to a temporary workplace are tax deductible can be paid tax free without needing to report on a P11D under the exemptions regime that replaced dispensations.

However subsistence should normally be a reimbursement of actual costs incurred or the HMRC approved flat rate. In this case it would seem that the employer has plaid their own “allowance” which is more than the costs necessarily incurred and therefore are to be treated as earnings:

https://www.gov.uk/expenses-and-benefits-travel/what-to-report-and-pay

If receipts were kept then tax relief could be reclaimed on the actual costs incurred.