The 73-page guide reflects tax liability for 2018-19 tax year and describes the tax and NICs’ treatment of business travel by employees and sets out HMRC’s approach in applying the legislation on employee travel.

It explains what counts as ‘business travel’ and, for employees other than those using their own vehicles, the kinds of expenses which qualify for tax relief.

All income that an employee receives from their employment is taxable. This includes pay, benefits in kind (such as company cars) and any expenses payments (including payments relating to business travel). However, where the employer reimburses expenses incurred in the performance of the duties of the employment, payment should be made gross, with the employee claiming tax relief.

Tax relief is available in two ways, by exemption or by deduction.

By exemption: certain payments or benefits in kind that an employee receives are exempt from tax. This means they are not taxable. Where a payment or benefit in kind is exempt, employers do not need to report the amount to us and employees do not have to apply for tax relief.

By deduction: certain amounts can be deducted from an employee’s total income before arriving at the amount on which he or she will be taxed. Where tax relief is available by deduction, the employer must report expenses payments or benefits in kind to us, and employees need to apply to their HMRC office for further tax relief. Some deductions also provide tax relief where employees meet the cost of expenses themselves without reimbursement.

In terms of NICs, there would be no question of a NIC liability where an employer makes a travel payment which does no more than reimburse an employee for the full cost of business travel.

However, if an employer reimburses the cost of, or directly pays for, travel arrangements which do more than that, there is a Class 1 NICs liability to be accounted for through the payroll in the relevant pay period.

2018 version 490: Employee travel - a tax and NICs guide for employers released 7 March 2018.